Companies That Will Disappear in 2009

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Vanishing Companies

A lot of fairly well-known public companies either disappeared or went bankrupt this year. 24/7 Wall St. looked at some of the largest and most well-known companies and picked ten that probably won't be around at the end of next year. Their brands may not disappear, but these companies will have been dissolved as the world knows them or will be working though the court system in the hopes of getting Chapter 11 protection and a chance at survival.

First Up: Chrysler

Chrysler

It is unlikely that its largest shareholder, hedge fund Cerberus, is going to throw good money after bad in an economy where U.S. car sales are dropping 30% compared with 2007 figures. But, the Chrysler brand could be around. Chrysler still has some popular models including it 300 series cars and it created the minivan. Jeep is regarded as the grandfather of four-wheel drive. Watch Chrysler Motors LLC go away and some of its products move into other hands.
Next: Sirius XM

Sirius XM

There is a theory that falling car sales will undermine the sale of Sirius subscriptions. The company says that it does no better than breaking-even in the first year it gets a new customer though GM. But, a shrinking subscriber-base is not good news for the satellite radio company's future. Sirius will be out of business, perhaps before mid-year. Who picks up the pieces? The logical choices are a healthy car company like Toyota or a satellite firm like DirecTV.
Next: AIG

AIG

AIG may be the biggest mess of all the financial firms that the federal government has bailed out. Uncle Sam has given AIG $153 billion in loans. AIG shares trade at $1.73, down from a 52-week high of $60.04. Congress seems less and less enamored of having a lot of money sitting in troubled companies. Watch for the new administration to get frustrated quickly and appoint its own people to auction off AIG divisions.

Next: Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac are two for one. They are both penny stocks, reflecting the fact that the Treasury has essentially taken them over. Within a few months, the value of the common shares in the firms will be gone. The new administration may even decide that it does not need both companies. They can be replaced with some of their role going to the FDIC and the rest to one consolidated entity controlled by The Treasury Department which is already funding them.
Next: Rite-Aid

Rite-Aid

Rite Aid trades at $.47 down from at 52-week high of $4.16. The pharmacy company has over 5,000 stores and Wall St. does not expect it to be profitable in the foreseeable future. The chain is a roll-up of the original company and Brooks and Eckerd stores which it acquired. With a debt load of over $6 billion, the firm is likely to falter. Competitors CVS Caremark and Walgreen would be happy to pick up the pieces.

Next: The New York Times

The New York Times

The New York Times has to repay $400 million in debt in the first half of 2009. It plans to mortgage its headquarters, but what that will bring in an uncertain real estate market is unknown. The firm's 'Boston Globe' and regional newspaper operations lose money, so they will be hard to sell. Another big media operation, perhaps News Corp which owns 'The Wall Street Journal' and 'The New York Post,' will come in and auction off what it can and keep the flagship 'New York Times' newspaper and NYTimes.com website.
Next: Nortel

Nortel

Nortel, the huge telecom equipment company, has already been mentioned as a firm which could file for bankruptcy. That may be a game to get creditors to cut down their demands. It could be that a huge contraction in the industry which is also undermining the fortunes of competitor Alcatel-Lucent is pulling Nortel under. Nortel has a pension obligation which may approach $3 billion. Selling divisions in a poor credit market will be hard. A bankruptcy filing would let a court run an auction.
Next: Pier 1

Pier 1 Imports

Pier 1 trades down at $.45 from a 52-week high of $8.25. This holiday season will determine its fate. The retailer recently said that its same-store sales could fall as much as 18% during the current quarter. Long-term debt is $184 million. More losses mean debt service becomes a huge issue. No other retailer is likely to want the stores, so this is probably liquidation.

Next: Charter Communications

Charter Communications

Charter Communications has over $20 billion in debt. The cable business usually drives reasonable cash flow, but Charter has to upgrade its system to better compete with telecom companies. Debt service is overwhelming operating income. The stock is down to $.15. Eighteen months ago, it was close to $5. Billionaire Paul Allen will get out while he can and sell to one of the other large cable companies. Charter recently said it is "exploring financial alternatives."
Next: Hovnanian

Hovnanian

Hovnanian shares are down by 70% over the last year. Recently, the shares have been as low as $1.70, putting the company's market cap at $171 million. The housing downturn may actually get worse as unemployment and foreclosures rise. JMP Securities recently commented that HOV is a "bankruptcy risk" due to debt and exposure in the hardest hit real-estate markets. A liquidation with Hovnanian would probably be an auction of land and unsold homes.

More: Defunct Auto Brands