3 Companies That Won't Follow Blockbuster Video

Source: The Consumerist.

One iconic American business officially closed its doors for good today.

Today, Blockbuster, the popular video-rental company that is owned by DISH Network (NASDAQ: DISH  ) announced it would be shuttering all of its operations in the final admission of defeat for the once-popular retailer. DISH bought Blockbuster in April 2011 for $228 million in cash when it had 2,400 stores. It will close the final 300 by early next year.

Blockbuster Video had a peak store count of 9,100 in 2004, yet after continued advances from Netflix, Hulu, and Amazon Instant Video, the company was forced to file for bankruptcy in September 2010. Blockbuster was a dominant player in the entertainment industry, and in 2002, it had a market capitalization of more than $4 billion, but it will now only continue to exist through its streaming Blockbuster @Home service for DISH customers and Blockbuster On Demand for the general public.

It is always troubling to see once iconic brands fall by the wayside. But, unlike Blockbuster, there are three companies that are here and here to stay.

1. Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  )
If there was ever a company that would stand forever, it would likely be Warren Buffett's Berkshire Hathaway. While at its very core it is an insurance business (and people always need that!), it also owns and operates transportation, energy, consumer products, and all sorts of other businesses.

Not only do all of these businesses make up its operations, but it also has an equity position in countless other companies in a variety of sectors, including Wells Fargo (NYSE: WFC  ) , Coca-Cola, and IBM, which are three enduring companies themselves, and Berkshire had almost $50 billion invested in those three companies alone.

Since 1965, there have been 11 years where the S&P 500 had negative returns, and Berkshire Hathaway has only had negative growth of its book value in two of those years. Although Buffett won't be around forever, I trust that the businesses he has built at Berkshire Hathaway will.

2. Wells Fargo
You may be surprised to see Wells Fargo on this list since it's a bank and because of all the recent turmoil surrounding the entire banking sector -- but Wells Fargo is a little different from its other megabank peers. To the possible dismay of some, it's unlikely that any of the four megabanks (JPMorgan, Bank of America, Citigroup, and Wells Fargo) are going anywhere anytime soon, considering they have nearly $8 trillion worth of combined assets, but Wells Fargo is a little different than the rest.

There has been some grassroots momentum to enact a law that would have similar parameters to the 1933 Glass-Steagall Act, which restricted commercial banks (typical lending) from engaging in investment banking (trading and the like) activities and vice versa.

While this coming back is highly unlikely, Wells Fargo is most insulated against this risk and as of the most recent quarter, more than half of its assets were attributed to its consumer bank, which is not the case with the other of the big four:

Assets Attributed to Consumer Banks

Bank of America


JPMorgan Chase


Wells Fargo




Source: Company earnings reports.

All of this also excludes the reality that Wells Fargo has demonstrated time and time again that it is not only among the biggest, but it is also one of the safest banks in the country, which means that it will likely be around for a long, long time.

3. Visa (NYSE: V  )
There is no denying that the way people make transactions with one another is changing, and the old adage "Cash is king" will likely give way to "Credit cards are king," in the not-too-distant future. One company at the forefront of that is Visa, which has a twofold advantage and will likely be poised to remain on top and dominate the payments industry far into the future.

First, there are, of course, the cards, which we all carry in our wallets. But there are also the expansive payments networks where the transactions have to securely pass in order to be completed. And for the previous 12 months ending in September, those networks handled $6.8 trillion in total transactions.

To put that number in perspective, it had almost as many dollars flowing through its networks in 12 months as the United States produces in economic output in six. Yet it's not like that is some stable number, as that represented a 10% gain over the previous year, meaning that it will likely continue this rapid pace for years to come.

If you want to talk about an entrenched company in a rapidly growing market, look no further than Visa.

More from Buffett
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Comments from our Foolish Readers

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 November 09, 2013, at 5:29 PM, cmalek wrote:

    No company, like the Titanic, is unsinkable. Where is Crown Cork? How are US Steel and Xerox doing?

    Berkshire Hathaway,as we know it. is still going to be here next year and for a couple of years after that. However, Warren Buffett and Charlie Munger, the men who built it into what it is today and maintain it as such, are no spring chickens. When they go to work for the Big Investor, who is going to run BRK? Is it going to be an astute Buffett-type investor, or is it going to be some mutual fund hot shot who is going to be in and out of positions on a weekly basis? What effect will the death of Warren Buffett have on BRK.A and BRK.B. After all, for all intents and purposes, he IS Berkshire Hathaway. I would be wary of buying BRK stock at today's prices only to have it lose much of itsm value when Buffett dies. It would take a very long time, if ever, for it to recover to the price level just prior to his death.

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