10 Brands Losing the Most Value

Category: Breaking News Published on Monday, 15 October 2012 13:40 Written by 24/7 Wall St.

Once again, Coca-Cola was ranked the most valuable brand in the world, according to Interbrand, one of the nation's top global brands experts. Apple, to the surprise of none, was very close behind. Considering the consumer electronics company's growth, it will easily eclipse the long-time number one brand by next year.

While some of the biggest brands — including Amazon.com (NASDAQ: AMZN), Samsung and Oracle (NASDAQ: ORCL) – have grown their value by more than 20% since last year's report, others have fallen precipitously. Goldman Sachs, still one of the world's most valuable financial brands, lost 16% of its brand's worth. BlackBerry lost nearly 40% of its brand's value. Based on the Interbrand report, 24/7 Wall St. reviewed Goldman, BlackBerry and eight other brands that lost the most value compared to last year.

Several industries have grown substantially in the past year. Auto companies, still recovering from the recession, saw major gains in their brand value since the last report. Nine of the 11 large European, Japanese and American automakers on 100 most valuable brands list grew in value last year, up a combined 12%.

Together, technology firms measured by Interbrand, led by Apple's stunning 129% brand value growth, have grown by nearly 27% to more than $320 billion in total value. However, the performance of brands within the technology sector has been much more mixed than the auto industry. While Apple and Samsung are among the most improved brands compared to last year, the sector also has some that are the worst-performing — and that is not a coincidence. As Apple and Samsung have redefined the mobile phone market, brands like BlackBerry and Nokia are being left behind.

Brands are successful when they are able to redefine a market, Interbrand CEO, New York, Josh Feldmeth told 24/7 Wall St. He gives the example of Apple, which took the mobile phone market and turned it into an ecosystem in which consumers buy games, listen to music and browse the Internet on a single device.

When comparing the brands that are doing well to the brands that are struggling, Feldmeth said, the brands that have done well have been able to predict what people want in a market. "Strong brands anticipate needs and transform desires," Feldmeth said.

Some sectors are struggling across the board, arguably none more so than financial services. In Interbrand's 2008 report, the combined brand value of the financial services industry was more than to $130 billion. As of the 2012, brand value had fallen to just over $91 billion. The damage to banks is partially a result of negative press generated from the recession, but also in part because they are performing poorly as a business. Feldmeth explained that a large part of Interbrand's valuation comes from the performance of the company, and that has affected the Citigroup, J.P Morgan and some of the other large banks. "If you can't make money with a brand, it's not really valuable," Feldmeth said.

24/7 Wall St. reviewed Interbrand's Top 100 Global Brands 2012 report, which measures the period of July 1, 2011, to June 30, 2012. Included in the valuation of each brand were the strength of the brand, the financial success of the branded products or services and the extent to which the brand plays a role in that company's success. 24/7 Wall St. also obtained the financials of each brand's parent company, including market share and company revenue.

These are the brands that lost the most value over the past year.

10. Dell
> Pct. brand value decline: 9%
> Brand value: $7.6 billion (49th)
> Parent company: Dell Inc. (NASDAQ: DELL)
> 1-yr. change in revenue: -2.36%
> Industry: Technology

Dell's brand has consistently lost value over the past four years as the company has moved away from PC sales towards IT services, a strategy Hewlett-Packard Co. (NYSE: HPQ) also has attempted with limited success. For 2012, Interbrand values Dell's brand at $7.6 billion, the lowest it has been in the past 11 years. Although it remains one of the world's largest PC makers, this year's second-quarter PC shipments declined by 11.5% from a year before. The company also has struggled to create a viable smartphone, and it stopped selling the devices in the United States in March. Despite recent problems, Dell's last annual report indicated that in fiscal 2012 "enterprise solutions and services business, a bellwether for execution of [the company's] strategy, grew 6% to $18.6 billion, and was nearly 30% of revenue and almost half of gross margin dollars."

9. Thomson Reuters
> Pct. brand value decline: 11%
> Brand value: $8.4 billion (44th)
> Parent company: Thomson Reuters Corp. (NYSE: TRI)
> 1-yr. change in revenue: 1.5%
> Industry: Business services

While Thomson Reuters used to be the dominant player in the financial terminal market, competitor Bloomberg has gained market share in recent years and has become the terminal to have on Wall St. Burton-Taylor International Consulting managing partner Douglas Taylor told Canadian Business in February that Bloomberg's market share has finally caught up with Thomson Reuter's, with each holding about a third. "It's perceived as the Mercedes product," Taylor said of the Bloomberg terminal. "If you have a Bloomberg, you have the ultimate terminal." The struggle to fend off challenges from Bloomberg and others led the Thomson family, the company's controlling shareholders, to remove Tom Glocer as CEO in December. But despite the company allowing the competition to gain on it, Interbrand notes that Thomson Reuters continues to lead its respective market in other key areas, such as legal research databases for law firms and the Checkpoint database for tax and accounting professionals.

8. Honda
> Pct. brand value decline: 11% (tied for 9th)
> Brand value: $17.3 billion (21st)
> Parent company: Honda Motor Company Ltd. (NYSE: HMC)
> 1-yr. change in revenue: 4.6%
> Industry: Automotive

The brand valuation of the worldwide automotive industry has begun to recover after a major dip during the recession, rising from a total of about $128 billion in 2010 to over $160 billion in 2012. The value of all of the top car brands measured by Interbrand increased since the 2011 report, except for Honda and Kia. Honda's brand value in 2012 of $17.3 billion — which is $13 billion less than its Japanese rival Toyota Motor Corp.'s (NYSE: TM) brand — is the lowest since 2006. Some events that have impacted the company were beyond its control, including the Japanese earthquake, which affected its manufacturing, and floods in Thailand that hurt some of its suppliers. The carmaker, though, is responsible to some of the damage to its brand. Honda has issued multiple major recalls in recent years, including one for more than 570,000 Honda-branded vehicles earlier this week.

7. MTV
> Pct. brand value decline: 12%
> Brand value: $5.6 billion (67th)
> Parent company: Viacom Inc. (NASDAQ: VIAB)
> 1-yr. change in revenue: 9.7%
> Industry: Media

Does the M really belong in MTV anymore? Interbrand notes that MTV continues to steer further away from its musical roots and continues to experiment into low-cost content, leading to an "identity crisis." The agency added, "MTV would do well to push the boundaries and recapture some of its lost edge — the very thing that made it a household name more than 30 years ago." Even some of its staple programming is hitting turbulence. Jersey Shore, which became the most popular show in the history of MTV, started declining in the ratings in the beginning in 2011. The show will now come to an end following Season 6, which will premiere Oct. 4. Meanwhile, the ratings for the MTV Movie Awards in June were down 29% from a year ago.

6. Citi
> Pct. brand value decline: 12% (tied for 7th)
> Brand value: $7.6 billion (50th)
> Parent company: Citigroup Inc. (NYSE: C)
> 1-yr. change in revenue: -5.2%
> Industry: Financial services

After five years of consecutive decline, Citi's brand value in 2012 is less than one-third of its all-time high of $23.4 billion. By comparison, the brand value of J.P. Morgan Chase & Co. (NYSE: JPM) , another money center bank, has risen in two of the past three years. During the last several years, multiple lawsuits have been brought against Citi for its role in the U.S. subprime mortgage crisis. A $45 billion bailout from the U.S. Treasury in 2008 and a failed Federal Reserve "stress test" — a test that evaluates a bank's ability to survive a stock or housing market crash — have also hurt the bank's reputation. To help revitalize its brand, the bank secured an Olympic sponsorship and launched a major advertising campaign to highlight its major historical financial innovations. However, Interbrand's Josh Feldmeth told 24/7 Wall St. he did not believe Citi had a marketing problem, but that "evaluating banks on fundamentals is very much in play" in Citi's brand decline.

5. Yahoo!
> Pct. brand value decline: 13%
> Brand value: $3.9 billion (97th)
> Parent company: Yahoo Inc. (NASDAQ: YHOO)
> 1-yr. change in revenue: -10.6%
> Industry: Internet service

In the past year, news stories about Yahoo! have centered around the firing of its foul-mouthed chief executive and the dismissal of her replacement due to discrepancies in his resume. Although the company looks to have finally found a CEO who can last long-term in Marissa Mayer, a change in Yahoo!'s fortunes will not come easily. Over the past several years the company has increasingly lost its share of the display ad market to Google Inc. (NASDAQ: GOOG) and Facebook Inc. (NASDAQ: FB). EMarketer now predicts that Yahoo! will have 9.3% of the web's display ad revenue in 2012, below Google's 15.4% and Facebook's 14.4%. In 2011, Yahoo!'s share of display ad revenue was 11%, down from 14% in 2010, when it brought in more display ad revenue than any other web property. Nevertheless, Mayer is looking to make Yahoo! into a more mobile company, where it can begin to gain back revenue through smartphones and tablets.

4. Moët & Chandon
> Pct. brand value decline: 13% (tied for 5th)
> Brand value: $3.8 billion (98th)
> Parent company: LVMH Moët Hennessy Louis Vuitton
> 1-yr. change in revenue: 22.4%
> Industry: Alcohol

Part of French luxury conglomerate LVMH, Moët & Chandon's brand value declined by more than $500 million in the past year. The brand lost value despite opening a boutique hotel in St. Tropez and launching celebrity-hosted tours worldwide. In order to help restore brand value, Moët & Chandon has signed a sponsorship contract with the America's Cup, one of the most well-known sailing races worldwide. Interbrand's Josh Feldmeth told 24/7 Wall St. that, "It's not that the Moët & Chandon brand is any weaker, it's that rituals are changing" as economic growth comes from parts of the world that do not yet associate champagne with celebration. The brand also remained the best-selling champagne in the United States last year, with sales volume rising 1.3% to reach 410,000 cases according to Shanken News Daily, a wine, spirits and beer industry news service.

3. Nokia
> Pct. brand value decline: 16%
> Brand value: $21.0 billion (19th)
> Parent company: Nokia Corp. (NYSE: NOK)
> 1-yr. change in revenue: -20.5%
> Industry: Electronics

Nokia has had a rough year. After Nokia lost market share for several years, Samsung finally overtook it as the largest manufacturer of mobile devices in the first quarter of 2012. The company's stock price has been cut by more than half in the past year, and the company announced in June that it was cutting 10,000 jobs to preserve cash. Now the Finnish company is staking its hopes on the Microsoft (NASDAQ: MSFT) Windows' mobile operating system. In September, the company previewed its Lumia 920 smartphone to investors, but they were not impressed. "The challenge is that the world is working on the 4th, 5th and 6th editions of their devices, while Nokia is still trying to move from Chapter 1," RBC analyst Mark Sue told Reuters following Nokia's presentation to investors. "It still has quite a bit to catch up." But even Nokia's catchup efforts were hurt in April when early buyers of the Nokia Lumia 900 had problems connecting to the web.

2. Goldman Sachs
> Pct. brand value decline: 16% (tied for 3rd)
> Brand value: $7.6 billion (48th)
> Parent company: Goldman Sachs Group Inc. (NYSE: GS)
> 1-yr. change in revenue: -23.2%
> Industry: Financial services

Goldman Sach's brand has taken a major hit since the financial crisis because of its involvement in the sale of complex collateralized debt obligations and in the Greek debt crisis. The company's practices returned to the spotlight this March when an executive director in the firm's London office resigned in a scathing op-ed piece published The New York Times. Smith said, "The interests of the client continue to be sidelined in the way the firm operates and thinks about making money," and he noted that managing directors would often refer to clients over email as "muppets." Revenue in the first half of 2012 was at its lowest level since 2005 due primarily to weak trading volume. The company responded by cutting pay by 14% during the first six months compared to the previous year and reducing its headcount.

1. BlackBerry
> Pct. brand value decline: 39%
> Brand value: $3.9 billion (93rd)
> Parent company: Research in Motion Ltd. (NASDAQ: RIMM)
> 1-yr. change in revenue: -25.2%
> Industry: Electronics

The BlackBerry, built by Research In Motion, used to dominate the smartphone market, with loyal users often joking about their addiction to their "crackberry." Yet blunders such as a BlackBerry outage in late 2011, the failure of its Playbook tablet and the stiff competition from Apple Inc.'s (NASDAQ: AAPL) iPhone and Google's Android devices have led to a rapid decline of BlackBerry's brand value. BlackBerry's share of the smartphone operating platform market dropped from 21.7% in July 2011 to 9.5% just a year later, according to comScore. Meanwhile, Apple's market share went from 27% to 33.4% in that time, while Google's share went from 41.8% to 52.2%. The parent company has seen its stock decline nearly 90% in the past three years. RIM announced in June that it would cut approximately 5,000 jobs out of about 16,500 employees, or around 30% of its workforce. RIM is pinning its hopes on the BlackBerry 10, which will likely come out in early 2013.

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