Skip to comments.Eight Great Tech Brands That Are Now Losing Money
Posted on 05/11/2012 8:48:55 AM PDT by SeekAndFind
It is a trend in the consumer electronics business manufacturers rise to become industry leaders only to be outshone by the competition as high-priced gadgets quickly become commodities. Based on recent earning reports of the biggest electronics makers, 24/7 Wall St. set out to identity the once high-flying brands that are now losing money.
A review of the biggest losers demonstrates how little consumers care about prior successes. Although these companies were the industry darlings once, today consumers may not even remember their names.
Companies such as Nintendo, Research In Motion, Sony and Nokia dominated their markets for a number of years and, in many cases, had few to no serious competitors. These companies often rose to the top because of major breakthrough products, such as the Nintendo Wii, RIMs BlackBerry and Sonys Walkman.
But the companies on this list have not managed to adequately follow up these successes with new products and now are losing ground to competitors. Sharp has lost money due to competition from companies like Samsung that have stronger brands and can undercut its prices on TV. Nokia, which continues to do well in the low-end cell phone market, is losing money because it has been unable to make a significant break into the growing smartphone market.
24/7 Wall St. has identified eight of the most popular tech brands that are losing money. To demonstrate these companies waning popularity, 24/7 reviewed financial data from their financial statements, as well as data from a number of major research firms.
These are the eight great tech brands losing money.
Research In Motion (NASDAQ: RIMM) was, for a time, a leader in the smartphone market. Its BlackBerry phones helped pioneer the industry. The companys popularity has since waned and it has begun to lose money. In the fourth quarter of fiscal 2012, RIM had a net loss of $125 million, the result of goodwill charges and an inventory provision taken primarily on certain BlackBerry7 products. Revenue was down 24% compared to the year prior. According to Comscore, RIMs share of the U.S. market for smartphone subscribers dropped from 16% last December to 12.3% in March. Meanwhile, the share of smartphones using Googles (NASDAQ: GOOG) Android rose from 47.3% to 51% over the same period. The companys BlackBerry 10 handsets, which are being released later this year, may be RIMs last chance for relevance.
Sharp reported a record annual loss of $4.67 billion this past April. The company also announced that it expects to continue to lose money in the current fiscal year. Sharps losses are primarily due to falling prices and declining sales of its LCD televisions. The Japanese company has been struggling to compete with South Korean manufacturers. In addition, the company spent $1.5 billion in restructuring costs. In March, Sharp sold a 46% stake in its largest plant to Taiwanese rival Hon Hai to soften losses at its television business.
Electronic Arts (NASDAQ: EA) reported a net loss of $205 million for the fiscal third quarter ending December 31, 2011, despite generating $1.06 billion in net revenue over the same period. Two of the companys major titles FIFA 12 and Battlefield 3 have each sold more than 10 million copies, a particularly large quantity for games. Madden 12 has sold nearly 5 million. Many experts believe that the companys launch of The Sims Social meant as a competitor to Zynga (NASDAQ: ZNGA) products has not done well. This was viewed as a gamble on EAs part, as the company has spent hundreds of millions of dollars trying to break into the social games space. It is not the first time for EA to be in the red. The company had a net loss of $322 million in the same quarter the year before.
Sony (NYSE: SNE) was a world leader in a variety of electronic products only a few years ago. As recently as November 2011, the company cut its sales forecast for TVs, cameras and DVD players. The companys financial situation has only worsened since then. In April 2012, Sony decreased its earnings outlook for the fourth time in less than a year, warning of a potential $6.4 billion net loss in the last fiscal year. The Wall Street Journal said the loss would be the biggest-ever in the electronics conglomerates 65-year history. Sony has been dealing with ongoing losses in its television segment. In its consumer electronics arm, the company has been struggling to deal with competition from companies like Apple (NASDAQ: AAPL) and Samsung. Sony also has lost its standing in the game console market, which it once owned with the PS2, and in the portable music device market, which it owned with the Walkman.
Nintendo was the number one video game console manufacturer in the world thanks to its Wii. In order to better compete, Microsoft (NASDAQ: MSFT) and Sony slashed prices on their Xbox 360 and PS3 products. Nintendo, as a result, was forced to drop the prices of both its Wii and portable player DS. In April 2012, the company posted a total loss of $461.2 million for the 2011 fiscal year. All three companies also face the growing competition posed by smartphone-based gaming.
Nokia (NYSE: NOK) has long been the worlds largest handset manufacturer, but it lost that position to Samsung in the first quarter of the year. Its past success was due, in large part, to the companys low-end cell phone models, which are particularly popular in developing countries. When it came to smartphones, however, Nokia has not kept up. The market continues to be dominated by Samsung and Apple. Nokias inability to break into the more profitable smartphone arena has been apparent in the companys profit and loss statements. In April 2012, the company announced a quarterly net loss of $1.2 billion, blaming greater than expected competitive challenges. In an attempt to turn itself around, Nokia has set a joint venture with Microsoft to distribute Windows mobile on its smartphones in exchange for financial and marketing support.
7. Barnes & Noble
Barnes & Noble (NYSE: BKS) has invested increasing amounts in its Nook e-book reader. But intense competition from other tablet and e-reader companies, including Apple and Amazon.com (NASDAQ: AMZN), has kept the company in the red. For the 39 weeks that ended January 28, 2012, Barnes & Noble lost more than $11 million. The company blamed the increasing losses on continued investments in its rapidly growing Nook business, including advertising costs and personnel. To help it with the Nook development costs, Barnes & Noble has also formed an alliance with Microsoft. The software company has made an investment in the book companys e-book and e-reader businesses in exchange for the creation of Nook models that run the Windows OS.
Acers business plan used to rely on the netbook, the cheap, portable and underpowered laptop. In the past two years, however, netbook sales have been disrupted by the surging tablet market, as well as the growing popularity of smartphones. Dropping the price did little to encourage demand. The company reported a massive annual loss of $212 million in 2011. Now the company is focusing on the Utlrabook, Intels (NASDAQ: INTC) laptop and effectively the next generation of netbook. It appears the company has not learned its lesson. According to The Verge, Acer Global President Jianren Weng predicts that PC Ultrabooks will drop to $499 in 2013 to compete with Apples iPad. Unfortunately, that is several hundred dollars less than the company needs to make money.
But look at Oracle, SAP, and Microsoft. They have continuing streams of revenue from enterprise accounts.
I think people are being cautious right now. They want to know how the election is going to go. They know if Obama wins, things will go in the toilet. If Conservatives win, things will get better but at what speed? If Obama is run out of office, then it will be time for people to come together and make this country into what it once was. It’s up to the people, not government.
Possibly, but that has nothing to do with this article. All of the companies mentioned have lost revenue to other companies. It’s not an across the board drop in tech sales. For example: Sony and Sharp, giant Japanese manufacturers have fallen to Korean Samsung, which also took down Nokia in a completely different market.
Is it losing money or profits down ?
I challenge that RIM was ever a great company. I worked for a company that worked with them in the late 90s, they stunk. They got their position in the smartphone market mostly by not having a lot of competition.
I’ve never forgiven EA Sports for abandoning the PC market. As I was winding down from being a gamer Madden and NHL were the games that kept me playing, then they left the PC. I understand that market had gotten small, but it still bugs me.
Sony isn’t a surprise, I always thought HDDVD was going to beat BluRay just because Sony has such a long history of screwing up clear market advantages. So listing them as losing in spite of winning is pretty much par for their course.
We always knew eventually the so-so tech behind the Wii was going to cost it market.
The security features keep me coming back to Black Berry. I’m on my third one.
Yet, government is working daily to flip that paradigm 180 degrees. Let's hope they haven't completed their work by November.
In the world of gaming, it seems Angry Birds and the flock of tablet/hp games have taken far more than a nibble out of the "gaming community".
In dollars and cents terms this is catastrophic, as the revenue is incomparable.
As for Nokia, Acer et al... the writing was on the wall years ago. The idea of "changing" phones, home computers like we change underwear is a thing of the past.
The "Technological Age", which has been with us since the 80's, may be one of the most short lived eras known to man.
Economically, with so many eggs in one basket so to speak, the "Angry Birds" may turn into something far more sinister.
And we're not talking Hitchcock.
Um-hm. I’ve had 3 blackberrys, but I just switched to an iPhone. I’m pretty underwhelmed with the iPhone. It’s got some neat bells and whistles, but the email is absolutely awful compared to blackberry. Depending on what the new blackberry looks like, I might be switching back.
Oh, Maybe THAT IS WHY! E.A. Is a bunch of Pandering Morons who screw up great gaming franchise for early release dates and building up the hype!!!!!
Glad to see Barnes & Noble on the list. I genuinely hate the Jane Lynch commercials for the Nook and the customers and staff at our local B & N unit are self righteous leftist pompous snobs. They try and hide conservative titles in obscure places and when you ask for one, they roll their eyes or make some obnoxious remark.
RE: They try and hide conservative titles in obscure places and when you ask for one, they roll their eyes or make some obnoxious remark.
I don’t know what place your Barnes and Noble is but it must be staffed by liberals.
But I live in the suburbs of NY and my B&N store prominelty displays Mark Levin’s, Glenn Beck’s, Sarah Palin’s, Jonah Goldberg’s and other conservative writer’s books ( those on the best seller list at least ).
And NY is a Democrat controlled state.
Eight FORMERLY great tech brands that may be headed for bankruptcy.
Shame to see Sony on this list. I’ve been a long time fan of Sony products, particularly their televisions. Problem is, they’re expensive and these days you can find the same features on other labels for a lot less money. I still recommend a PS3 to each and every person who asks what blu-ray player they should buy. I have two of them and I’m not even a gamer. Just a fantastic machine.
As an avid PC gamer I say GO TO HELL EA AND TAKE ACTIVISION WITH YOU!
I’m not crying any tears over EA let me tell you. They, along with Activision, screw up everything they touch.
Torchlight II anyone?
I stopped buying Sony years ago when they kept trying to push their own proprietary and expensive standards.
I finally gave in and bought a Sony camera for my wife this year, it takes SD memory cards, maybe they have learned their lesson.
At least you HAVE a B&N. I live in Fremont, CA - capital county for Liberal nonsense (Pete Stark is my flaming idiot representative to prove the point) and the B&N here left town because they lost their lease. We now have NO book stores in town.
As for hiding conservative books, etc. NEVER saw them do it here.
I used to live in Fremont way back in ‘77 close to the “Hub”, is it still there? Also there was a drag strip on one side of the Nimitz(SIC?), from the auto factory that had awesome glider rides. It’s probably gone now too.
Sorry about Pete Stark, I’ve heard of that moonbat.
Funny about my neck of the woods, we live close to Bremerton, is we are getting “bluer” with each election. Weird too, because we are a military county. Our biggest employer is the Navy, Puget Sound Naval Shipyard and Sub Base Bangor. Perhaps that is partially the reason, the military retiree’s we are seeing REALLY like their bennies and want more.