Did These 5 Failed Brands Let You Down in 2012?

Failure can be a harsh word, but when so much of a company's success is riding on its brand, there's little room for error. For the sake of a little year-end schadenfreude, let's take a look at how some of 2012's stock losers flamed out.

Daily deals are a steal
Groupon (NASDAQ: GRPN  ) probably didn't love the flash sale of its stock in 2012. After debuting in November 2011, the company has had nonstop trouble -- from an onslaught of competitors to accounting problems to the questioned suitability of its founder as CEO. The stock is down 81% over a 52-week period, and it has little support from The Motley Fool's CAPS community, with 236 All-Stars giving it an underperform rating. Even Groupon the Cat, the sarcastic mascot of the daily-deals site, doesn't have a sufficiently witty retort to save its namesake company.

Does not compute
Computer maker Hewlett-Packard (NYSE: HPQ  ) has been flying low for a while now, but with its recent Autonomy acquisition bursting into flames, it looks like the company just lost its last engine and is on the verge of a death spiral. Posing itself as the victim of accounting deceit, HP has only succeeded in calling its decision-making abilities into question. And, adding insult to the $8.8 billion injury, it's recently come to light that some of HP's rivals turned down the acquisition based on its unrealistically lofty price point.

The stock is down 46.4% year to date, but even that decline doesn't reflect the true effect of HP's troubles. The stock experienced a slight boost from the rumor that activist investor Carl Ichan may be interested in intervening. The news pushed HP 2.6% higher on Monday. But when investors are hinging their hopes on investor activism rumors, you know there's something seriously wrong.

It's getting harder for Mr. Softy
Tech giant Microsoft (NASDAQ: MSFT  ) has been a steady performer for the past decade, but 2012 was supposed to be the year of the brand's reawakening. With launches of Windows 8, the Surface tablet, and Windows 8 for mobile, the company was expecting to jump-start its stagnant market share. So far, that hasn't happened.

Some of the new product launches haven't had enough time to be tested fully, so 2013 might bring an upswing for Microsoft, but the company's biggest failing was on full display in 2012: hubris. Sure, Microsoft's marketing expenditures are enormous, but launching products in an intensely competitive space and expecting consumers to jump at them points to Microsoft's unrealistic self-image.

The shameless Surface tablet plug inserted into last week's episode of CBS' Elementary was the straw that broke this camel's back. But at least the circumstances in which that show's modern-day Sherlock Holmes used the underperforming device (ingloriously sitting on a toilet) were gratifying enough.

Everyday low standards
The year was going so well for Wal-Mart (NYSE: WMT  ) . Introductions of its own debit card and same-day delivery posed new opportunities to boost its lagging online division, and the rebounding economy was boosting sales. But recently, the retail stalwart has been giving investors cause to sling mud again. With bribery allegations in Mexico and other countries, and employee strike threats here in the U.S., Wal-Mart's brand is messier than a pigsty.

The retail giant is no stranger to controversy, but 2012 marked a year in which Wal-Mart reversed most of the hard work it had put into restoring its reputation as the nation's largest private-sector employer. Within the past few days alone, the supercenter king announced changes to its employee benefit standards, allowing it to essentially shrug off the Affordable Care Act that it so vehemently defended a few years back. By shirking its responsibility to its employees, Wal-Mart effectively puts the burden on taxpayers to subsidize its workers' health care.

The company's leading performance as an investment, claiming the often-sought-after "dividend aristocrat" designation, doesn't give it enough space to ignore the 800-pound gorilla in the room -- poor treatment of its 2.2 million employees .

Black thumbs unite!
FarmVille producer Zynga (NASDAQ: ZNGA  ) was a hit after its November 2011 IPO. Then, just like my failed attempt at an herb garden this summer, the stock shriveled up and (almost) died. The company continues to make money, but with cash continuously shoveled into R&D, Zynga hasn't been profitable, to say the least.

The game developer may have shortchanged itself by hanging on to Facebook's coattails, though that move did initially spell success. But no more! Zynga's separation from FB, and its moves toward legal gambling, might be just the ticket the developer needs to revive its business. In the meantime, with its stock down 76% year to date, too many questions remain to determine whether the company will grow and thrive with its new venture.

Forward march
Well, there you have it, folks -- five brands that have fallen from grace this year. As investors, we have a lot at stake here; it's important to recognize the impact of a company's poor choices. While some of the companies mentioned above have some semblance of hope left, use caution when determining whether 2013 will give these guys new opportunities to rise from the ashes.

Interested in more spectacular flame-outs? Best Buy landed on the honorable mention list for this article mainly due to its inability to recover ground as the bricks-and-mortar versus e-commerce battle wages on. After what might have been its most tumultuous year in history, there are now even more unanswered questions about the future for the big-box electronics retailer. How will new leadership perform? Will old leadership take the company private? Will a smaller store format work out for both the company and its brave investors? Should you be one such brave investor? To help answer all these questions, The Motley Fool has released a new premium research report detailing the opportunities -- and the risks -- in store for Best Buy. Simply click here now to claim your comprehensive report by today.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 18, 2012, at 5:48 PM, chopchop0 wrote:

    Article seemed reasonable until WMT was included in it to further a political agenda. From an investment standpoint, WMT does not belong with these other "brands"

    I am guessing the author missed out on the obvious buy opportunity for WMT in the spring during the mexican bribery scandal.

  • Report this Comment On December 19, 2012, at 7:16 AM, erikinthered100 wrote:

    Chochop0, I agree wholeheartedly. The WMT assertions are absolutely ridiculous. They betray a socialist anti-capitalist political agenda which has no place in an article on investing. WMT compensates its employees fairly according to their free market worth and is not responsible for how they obtain health care - the government's insane policies which tie employment to health care and superinflate health care costs through third-party payment are the problem, not WMT.

    If WMT was to follow the socialist agenda of the article, it would eventually become just another failed company and all its workers might be unemployed.

    We cannot afford the gold-plated entitlements that are literally bankrupting this country and forcing companies to foot the ever-increasing bill will only bankrupt them as well.

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