It’s been a banner year for the Standard & Poor’s 500, with the overall index up by more than 12 percent heading into this week’s two-day Sandy-related market close. But as the superstorm showed, into every life a little rain must fall. Several stocks on the S&P have suffered devastating losses this year. Here are the five biggest losers of 2012, and how they managed to buck the year’s trends.
No. 5: Electronic Arts (EA), down 42.2 percent on the year
It’s been hard times for the videogame industry, which has been fending off competition from free online games, such as those put out by Zynga, which is closely allied with Facebook. Game sales fell 8 percent in 2011, and then proceeded to drop even further this year, with sales down a whopping 20 percent through the beginning of September.
Electronic Arts, one of the giants of the gaming world, has felt the brunt of the blow. Its big game for this year, Star Wars: The Old Republic — which cost a staggering $200 million to develop — was introduced as a $15-a-month online game. But the game lost more than 400,000 paying players in its first two months out of the gate, and overall sales were so dismal the company shifted the model to free play after just ten months on the market. Then the company’s big fall/Christmas title, Medal of Honor: Warfighter, was such a critical disappointment that it drove down earnings. “Our Q3 looks soft mostly due to ‘Medal of Honor,’” CEO John Riccitiello said in a conference call. There are also messy patent infringement suits pending with Zynga.
After opening the year at 21, EA bottomed out in late July at just over 10. Late-year releases of long-time popular games like Madden 2013 and FIFA soccer helped cushion the blow, pushing the stock back up to 12 as of earlier this week.
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No. 4: Allegheny Technologies (ATI), down 44.1 percent on the year
Allegheny, a metals processor that makes products for the aerospace and petrochemical industries, is getting rolled by the global macroeconomy. Its third quarter profits fell by 43 percent in an earnings report released last week, capping off a year in which the stock has slid pretty much the entire time. Much of the company’s business is in China and Europe, and the sluggish economy in both areas has been a serious drain on its coffers. The company’s cash flow has been dribbling away into nothing; at one point, its free cash flow was a minuscule 0.4 percent of revenues.
ATI was over 50 in January, but fell back all the way to 28 in late June as the cash-flow problems became apparent. It rallied up to 36.75 in mid-September, but the recent weak earnings report has sunk it to a new yearly low of 26.7.
Photo: A fisheye lens attached to an electronic still camera was used to capture this image of NASA astronaut Sunita Williams, bottom, during the mission’s third session of extravehicular activity Wednesday Sept. 5, 2012. Allegheny Technologies makes products for the aerospace industry. (AP Photo/NASA
No. 3: Hewlett-Packard (HPQ), down 45.3 percent on the year
Hewlett-Packard has been a basket case for a couple of years now. As recently as April 2010, it looked solid, with a share price surpassing its pre-crash peak. But it lost nearly 40 percent of its value in 2011, and has lost more than that already in 2012. Since touching its all-time high of 53.75 on April 12, 2010, the stock has lost nearly three quarters of its value.
HP is still the world’s leading seller of computer, sprinters and servers, but its profits margins have been shrinking fast — they’re at 7 percent, but the company forecasts they’ll drop to somewhere between zero and 3 percent. It recently reported not just the worst loss in its history but an $8 billion writedown from its acquisition of Electronic Data Systems in 2008. Despite announcing 29,000 layoffs, CEO Meg Whitman, fresh from eBay and an abortive run for California governor, says it will take at least until 2016 before the company gets to where she wants it to be.
Photo: (AP Photo/fls/Thomas Kienzle)