Corporate America and the economy
Because companies had difficult times managing in the recession of the past year, they are now having an equally difficult time dealing with money now. Although Corporate America is hopeful, there are still signs that it will take more time and recovery efforts to return the industry to its former operating status. Financial risk is still a major concern for executives. Last year there were 207 bankruptcy filings in the world of publicly traded companies. If the recession continues or worsens, 2010 could be a year fraught with disaster.
Troubled companies
When it comes to predicting companies that may close or suffer great losses in 2010, it is an easy science. For instance, a company that expands but then experiences huge losses does not have a rosy outlook. Experts predict that companies trying to stretch budgets for expansion may not see the profits needed to pay for the expansion and continue growth. The following examples are companies that aren’t in the best financial standing for 2010 and why experts are interested in their performance.
- Eastman Kodak. Eastman Kodak is a photography company that transitioned from film to digital media. The move was expensive and sales declined by 26%, resulting in a $ 111 million loss. Experts caution that expanding business models in an unsure climate poses threats to the business as a whole.
- The Bon-Ton Stores. The Bon-Ton Stores are other businesses to monitor. Retail sales have declined since early 2009. Executives recently announced a new credit agreement that extends loan maturities on its debt. Experts have said the request for more time to pay their debts indicate a corporation without sufficient cash flow for it’s daily operations.
- US Airways. US Airways is an airline that is in trouble, and has been for some time. The recession caused many people to cut back on travel and all airlines struggled. It already filed for bankruptcy back in 2002 and the continued weak demand for service is straining it more. To mitigate losses the company recently reinstated their complimentary drink service in-flight and began charging for checking extra baggage.
- Westwood One. Westwood One is a broadcasting and cable TV company headquartered in New York. Though the company does have stable revenue, it is still in the midst of reorganizing. It recently announced its intention to cut Larry King Live from its broadcast lineup after 30 years. Experts herald this as a sign the company is struggling and looking for corners to cut.
- Dine Equity. Dine Equity Restaurants’ headquarters are in Glendale, California. The notable move with this corporation is its super-discounting program for customers. Discounts accounted for 4.3% decline over 2009 in sales. The company is introducing a new restaurant model to bring in new customers for 2010.
Even corporate giants suffer
Companies are suffering due to the aftermath of the recession. Executives are hoping that 2010 is a year of true market turnaround, but no one knows for sure if that is going to happen or if it is going to happen as smoothly as anticipated. In reality, big corporate entities are concerned with their money management just as small ones. They are trying to increase their market exposure in hopes of attracting new customers and therefore revenue.
