Customers, employees, shareholders and taxpayers hate large corporations for many reasons. 24/7 Wall St. reviewed a lengthy list of corporations for which there is substantial research data to choose the 10 most hated in America.
Read the 10 most hated companies in America >
Research about companies comes in two sets. One is public research about consumer satisfaction, customer care, pricing of products and services, and brand impressions. Wall St. research takes into account another set of factors, which include present earnings, profit forecasts, product development and quality, and brand valuations.
Some of the companies on this list are widely despised because of the businesses that they are in. In an economic environment where resources are stretched, an airline or retail operation that has millions of customers is likely to make a lot of enemies. Similarly, banks and other corporations with a large number of retail outlets are at a disadvantage compared with businesses with few customers. Some of the corporations on this list also have had to fire significant numbers of employees due to the recession. Downsizing causes poor morale, increases the workload of the remaining staff and affects customer satisfaction when service is poorer.
We examined each company based on several criteria. We considered total return to shareholders in comparison to the broader market and other companies in the same sector during the last year. We reviewed financial analyst opinions on those companies that are public. We analysed data from a broad array of sources, including Consumer Reports, JD Power, the MSN/Zogby Poll, ForeSee and the University of Michigan American Customer Satisfaction Index. We also considered negative press based on 24/7 Wall St.’s analysis of media coverage and the Flame Index, which uses a proprietary algorithm to review more than 12,000 websites and ranks companies based on the frequency of negative words. Finally, we considered the views of taxpayers, Congress and the White House — where applicable.
Several companies that should have been on the list based on performance and public perception during the financial crisis did not make it. For example, it would be easy to argue that mortgage giants Fannie Mae and Freddie Mac should be here. The bankruptcy and maintenance of the two by the federal government will cost taxpayers between $224 billion and $360 billion, according to the Federal Housing Finance Agency (FHFA). But, Fannie Mae and Freddie Mac are no longer stand-alone companies in any normal sense. Their shares have been delisted. Each is in effect a ward of the U.S. government with no ability to control its own fate through the actions of management or public shareholders.
The U.S. Postal Service could also be a candidate for the list. It has cost taxpayers billions of dollars, and it lost $5.1 billion in its last fiscal year alone. However, the Postmaster General and his staff have little or no control over the eventual fate of the USPS. Congress decides how and to what extent it will be funded. That means Congress essentially controls how many workers and offices will exist, and even, based on funding, how often the mail will be delivered.
It is worth noting that some of the companies on the list may have done very poorly by some measures, and well by others. A few of the most hated companies have had good stock performances. Others may have satisfied customers. All of this was taken into account when the decisions for the final list were made.
Nokia (NYSE: NOK) has punished its shareholders as its percentage of the smartphone market has dropped quarter after quarter -- its stock is down 50% in the last year. Nokia likely will lose its lead as the top handset company in the world to Samsung sometime this year. Nokia was tied for lowest overall satisfaction in JD Power's 2011 Wireless Traditional Mobile Phone Satisfaction Study. It also has received the lowest ACSI score for wireless telephones. According to Interbrand, Nokia's brand value has dropped 15% from last year. Nokia has tried to salvage its prospects through an agreement with Microsoft (NASDAQ: MSFT), whose Windows OS will be used in Nokia smartphones. Despite rave reviews for the new Windows Mobile, a partnership with the weakest mobile OS maker only makes Nokia's fortunes worse.
Goldman Sachs' (NYSE: GS) poor reputation was cemented when the government sued it for fraud in 2010. The firm settled with the government for $550 million, but this was viewed as little more than a slap on the wrist because of the bank's immense wealth. And the fraud accusations have not stopped -- they have actually accelerated. Goldman faces a set of suits over mortgage instruments it sold worth a total of $15.8 billion. The Federal Housing Finance Agency in September accused Goldman of misrepresenting the quality of $11.1 billion worth of residential mortgage-backed securities. In the cases in which Goldman has settled claims, the press has not always been favourable. According to a Wall Street Journal report, Goldman agreed to forgive 25% of principal balances on 143 mortgage loans to borrowers in New York, or $13 million of a total principal balance of $52 million. The $13 million is less than a senior banker at Goldman might make in a year. Perhaps those homeowners are part of the Occupy Wall Street protests against big banks, for which Goldman is the poster boy.
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