Companies come and go, but it’s always a bit of a shock to see an iconic business go bankrupt. Despite the shock, it’s not as uncommon as one might think.
An IBM ad in 2011 noted that of the top 25 industrial corporations in the America of 1900, only two survived to the 1960s. Of the top 25 on the Fortune 500 list in 1961, just six remain.
Those statistics show just how tough it is to keep a businesses going through lean times and changes in the way we live. Even more remarkable might be taking a business that is looking at the abyss of bankruptcy and bringing it back to profitability.
Most that are saved seem to owe their rescue to a combination of stern measures and strategic vision. Some, like the Detroit automakers and the insurance giant AIG, probably wouldn’t have survived without government help.
In any case, the tales are interesting, and after the big turnaround investors are left to ponder if the remade companies are worth investing in. Here’s our look at 7 Businesses Saved From the Brink of Bankruptcy.
The Tale: This is the bailout that made everyone but a bank hold their nose. As The New York Times reported this month, not long ago the idea that taxpayers would turn a profit from the rescue of the insurance giant seemed impossible to contemplate. But including the $20.7 billion in proceeds from the Tresury’s recent share sale, the Treasury and Federal Reserve have made $197.4 billion from the taxpayers’ $182.3 billion investment. One inspector general quibbles with the accounting, but there seems no doubt saving a “too big to fail” financial giant worked out in strict financial terms.
To Buy or Not to Buy: AIG is trading at about $35 a share, within pennies of its 52-week high and well above its low over that period. Investor Place looked at the pros and cons of AIG’s fundamentals. The company has shown a profit the last three quarters, but the jury is still out on how successful its restructuring will be.
The Tale: The rise, precipitous fall and ongoing rise again of the U.S. auto industry is a well-told story, but gets no less amazing in being repeated. GM and Chrysler, of course, were forced into bankruptcy, while Ford managed to restructure without filing for Chapter 11.
Three years after the government bailed out the industry, the wisdom behind the move seems obvious. Still, as sales figures have risen for the Big Three (and their competitors), the stock prices of two of them have fallen, a situation mainly ascribed to the troubles besetting the European economy. Ford ($10 per share, about $3 off its 52-week high) and GM ($23.25, about $4 off its 52-week high), might be considered a bargain. Chrysler, owned by Fiat, is cheap at about 4.54 euros ($5.83), although close to its 52-week high.
To Buy or Not to Buy: The experts are split. Some analysts see a good opportunity to buy stocks with a low price and a high P/E ratio. Others, despite the increase in sales, say investors should wait before betting on auto stocks.
The Tale: Apple, of course, is the most valuable company in history, with a market capitalization of more than $630 billion. The company famous for its cool, easy-to-use computers fell on hard times. In 1997, Steve Jobs came back to the company he had co-founded to try to save it. Apple had been suffering, posting a dozen years of losses. Jobs, of course, turned the company around with a string of iconic products from the iPod to the iPhone and the iPad. Jobs died last October but the company hasn’t missed a beat, releasing the iPhone 5 this month. It’s up to new management to try to keep Jobs’ juggernaut going.