Fools, don't do it.
It's the end of 10 years of disappointing portfolio returns. You're feeling a little lonely, a little vulnerable, yet a little hopeful at the dawn of a new decade. Don't let these companies seduce you at midnight with tall tales of earnings growth, healthy balance sheets, or the glorious promise of a new product.
No, really -- you might just wake up with an empty wallet and a tiger in the next room.
As we wrap up 2009, here are our top 10 companies that will be rendered obsolete in the next decade.
10. Vonage (NYSE: VG )
Vonage, purveyor of annoying commercials, has had stock scares in the past. But with increased competition -- from telecom companies offering digital voice bundles, to cable companies also getting in the act, to potential threats like Google's (Nasdaq: GOOG ) Voice application -- Vonage's VoIP days look numbered. With no moat around its technology, it'll have trouble battling its well-heeled competitors.
We don't think we're going out on a limb by saying Borders is a loser. Amazon.com has dominated book sales both physically and digitally. Meanwhile, Borders has posted declining sales, and it hasn't stepped out of the red for the past two years, except during the holiday season. We don't think Borders is headed for a fairytale ending.
8. Qwest (NYSE: Q )
Customers rarely show much love for major telecoms and cable companies, nor get much in return. (Comcast doesn't care. There, we said it.) But Qwest customers might be in the clear before too long. The company is milking a steadily declining phone subscriber base with no clear growth avenues.
7. Sprint (NYSE: S )
Speaking of steady declines in subscriber bases, has anyone seen Sprint lately? With wireless penetration rates greater than 90% in the U.S., and smartphone manufacturers now controlling software that can circumvent individual carriers' voice services, the future looks murky for wireless-industry growth. It's doubly murky for a third-place company that can't slow its gradual decline. Sprint's betting the house on a 4G WiMax push. If that doesn't work, look out below!
A few years ago, Blockbuster was going head-to-head with Netflix (Nasdaq: NFLX ) for home-delivery domination. Now it has shuttered stores, maintains a paltry presence (at best) in mail subscriptions, and faces increased competition from Redbox's $1 rentals. In the next decade, video streaming will be gaining steam. The company has too much ground to make up, and it's hemorrhaging money. Blockbuster, please follow the lights and exit the theater.
Sure, it's managed to grow its revenue so far, but is there really a long-term future for a bricks-and-mortar experience that relies on a target market of web- and tech-savvy early adopters? Sadly, no. Video game consoles already have access to online game downloads, and gamers can rent games through the mail. Game over, GameStop.
4. Palm (Nasdaq: PALM )
The Pre hasn't inspired much awe on the sales floor. Not surprising, since it's got an exclusive agreement with No. 7 on our list (Sprint). Innovators are crowding into the space. Whether they prefer an iPhone or an iDon't, consumers aren't flocking to Palm's last stand.
3. Abercrombie and Fitch
Look around -- no one is digging Abercrombie's style anymore. Tweens and frugal shoppers don't want to splurge on the exact same sweater everyone else is wearing. Nowadays, they're searching for individual expression and cheap chic. Unfortunately, Abercrombie's style and price point are off-target. Dropping sales and a Reuhl failure are exposing Abercrombie's weaknesses. The company might be placing its bets abroad, but the market is too crowded. Sorry, Abercrombie; the days of identical outfits are long gone, and so are you.
Poor Garmin. It was once a trailblazer, but you don't need GPS to find its competition. If you own a smartphone, just look in your pocket. Deep discounts point the way to Garmin's future. The company would be wise to refocus on its aviation, marine, and outdoor products. However, as its continued work on the poorly conceived Nuvifone shows, it'll exit the consumer market kicking, screaming, and destroying shareholder value.
Its botched merger with Time Warner (NYSE: TWX ) never worked, and now AOL is trying the solo gig again. Now that AOL's single, it's trying to sell everyone on its advertising and content-publishing properties -- completely ignoring the part of the business that still functions as an Internet service provider (ISP). That's probably a smart move, given the massive ISP subscriber declines that AOL was posting before its recent IPO. But we're not holding our breath that AOL's revamped business focus will recoup the bulk of its revenue that came from its ISP side. In coming years, while we're watching the ball drop, AOL will be watching its stock drop. Don't give it company. It came to this party alone, and it's leaving alone.
Here's hoping your New Year is loser-free.