Which Company Is Destined to Fail in 2010?

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Circuit City. Lehman Brothers. General Motors. CIT Group. These and many more companies have flamed out in high-profile failure and bankruptcy, after their managers took grave risks or made major strategic mistakes that ended in disaster. The carnage isn't over, alas. 2010 could bring many more high-profile flameouts.

Corporate America is still full of companies with balance sheets loaded with way too much debt. (Exhibit 1: Sirius XM (Nasdaq: SIRI).) Some companies overexpanded during the bubble days, catering to artificially inflated demand. (Exhibit 2: Starbucks (Nasdaq: SBUX).) Some companies have been unable to evolve to meet competitive changes in their industry's landscape. (Exhibit 3: Blockbuster (NYSE: BBI).) And some companies have all three of those factors to contend with!

Meanwhile, the bruised economy has done more than give consumers a newfound sense of thrift. Some consumers aren't spending because they simply can't. Given 10% unemployment, continued layoffs as corporations continue to cut costs, underwater mortgages, and rising credit defaults, the outlook seems bleak indeed.

Fortunately for investors, there are still solid companies with plenty of cash that can weather the tough times. Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL) are two companies with massive cash reserves, for example. They can continue to innovate while waiting for better times, and nobody has to worry that they can't afford to keep the lights on.

Unfortunately, there are plenty of companies that could fail in 2010 due to a combination of macroeconomic factors and company-specific problems. Some struggling companies could stagger through if times were better, but continued pressure on the consumer will make some companies goners.

Personally, I suspect Borders Group (NYSE: BGP) is one of the leading contenders for such a sad fate. It's struggled with debt, lagging revenue, and dwindling customer traffic -- and I'm simply not convinced that the retail landscape needs it anymore. Between powerful book-peddling rivals like Amazon.com (Nasdaq: AMZN) and Barnes & Noble, not to mention big changes in media, Borders may be destined for failure in 2010.

Let's turn it over to you, though. Which company do you think is destined to fail in 2010, and why? Leave your failure nomination in the comments below, in less than 250 words. You could win a subscription to Motley Fool Hidden Gems, whose whole team is dedicated to finding strong stocks for the long haul -- in short, the exact opposite of companies destined for failure.

The editorial team will select a winner based on the most compelling argument against a company. Our contest runs until 8:00 p.m. EST on Dec. 17; read up on full contest rules here.

Chime in below for your chance to win.

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Google is a Motley Fool Rule Breakers selection. Apple, Amazon.com, and Starbucks are Motley Fool Stock Advisor recommendations. The Fool owns shares of Starbucks.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy that doesn't see dead people, but tries to see dead companies.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 15, 2009, at 6:16 PM, splintar wrote:

    "Corporate America is still full of companies with balance sheets loaded with way too much debt. (Exhibit 1: Sirius XM (Nasdaq: SIRI).) Some companies overexpanded during the bubble days, catering to artificially inflated demand. (Exhibit 2: Starbucks (Nasdaq: SBUX).) Some companies have been unable to evolve to meet competitive changes in their industry's landscape. (Exhibit 3: Blockbuster (NYSE: BBI).) And some companies have all three of those factors to contend with!"

    And some author's still fail to get it and live in the same bubble they've always lived in.

    I'll decide. . . how about you stop writing?

  • Report this Comment On December 15, 2009, at 6:20 PM, longtermgrowth09 wrote:

    I have a sure one: during 2009 started as a sponge company with soaring revenues and profits but it ends the year with no 10k balance and like an empty bag. the company is called Spongetech, and the scam is being investigated by the SEC.

  • Report this Comment On December 15, 2009, at 6:22 PM, Fool wrote:

    Exhibit #1 on your list is going to outperform the market next year. I'm not sure how you see them failing without any debt due next year. Does this site do any research or just make it up as they go?

  • Report this Comment On December 15, 2009, at 6:31 PM, latimerburned wrote:

    I know that the credit cruch is supposedly over and that banks are starting to repay TARP because earnings are picking up. Dispite all that I am choosing Capital One as the company most likely to fail in 2010. They are very exposed to credit cards and those of the worst sort, the lower credit worthy customers. Now, they have awesome commercials but if the consumer doesn't get jobs they wont be able to pay off those CC bills. This would hit COF harder than most which would cut into their ability to fund those crazy commercials and hense market share. So, while TARP/FDIC wont allow them to fail, I do think this company has the potential to stumble and fall in 2010.

  • Report this Comment On December 15, 2009, at 6:34 PM, SwampBull wrote:

    Sears Holding Company - but it may take longer than a year. Eventually it will be an artifact of an old era. For now it's just the corner of the mall that no one enters.

  • Report this Comment On December 15, 2009, at 6:36 PM, SwampBull wrote:

    Sears Holding Company - though it may take more than a year for the wick to burn out. Eventually it will be a relic of a bygone era - remember the catalog? For now, it is just the corner of the mall with all the empty parking spaces.

  • Report this Comment On December 15, 2009, at 6:40 PM, joemiamifl wrote:

    CircuitCity.com is alive and kicking under Systemax (SYX). They also bought CompUSA last year and have owned TigerDirect.com since 1995.

  • Report this Comment On December 15, 2009, at 6:44 PM, Fool wrote:

    "Meanwhile, the bruised economy has done more than give consumers a newfound sense of thrift. Some consumers aren't spending because they simply can't. Given 10% unemployment, continued layoffs as corporations continue to cut costs, underwater mortgages, and rising credit defaults, the outlook seems bleak indeed."

    And somehow Apple will not be affected by this???? Not only does the author make thing up as they go, they've never been to an Apple store.

  • Report this Comment On December 15, 2009, at 6:44 PM, badassoz wrote:

    Recently spun off as its own entity, I don't see AOL making it much longer. With its glory days behind it and its recent IPO floundering, I see the writing on the wall, as does the CAPS community.

  • Report this Comment On December 15, 2009, at 6:57 PM, appleaday3k wrote:

    Microsoft Windows Mobile for sure. I'm still debating Microsoft is general. The lack of creativity and innovation..

  • Report this Comment On December 15, 2009, at 6:57 PM, Fool wrote:

    CGA forever!!!

  • Report this Comment On December 15, 2009, at 6:59 PM, Nairb1971 wrote:

    Sirius XM will survive in some form or another only on the basis of a "monopoly" for digital satellite radio.

    This downturn has got to hit the Computer/electronics Hardware industry not sure who it would be and if it would be a Computer Manufacturer like a Dell or Acer or an electronics company like NEC or Toshiba

  • Report this Comment On December 15, 2009, at 7:25 PM, FM5 wrote:

    They can't be talking about siri, It's Holding Strong, there only one way from here ./

    /''

  • Report this Comment On December 15, 2009, at 7:34 PM, retiredrancher wrote:

    I like Defense Solutions Holdings, Inc --DFSH, OTCBB

    If you need to get something done in Iraq --these are the folks to get it done

  • Report this Comment On December 15, 2009, at 8:18 PM, jayan25 wrote:

    Bgp- At some point (I suspect by the end of the 4th quarter) Ackman and the Pershing group are going to pull the plug. The run-up in both trading volume and price and then fall indicates speculation on the stock.

  • Report this Comment On December 15, 2009, at 8:19 PM, Fool wrote:

    author retard

  • Report this Comment On December 15, 2009, at 9:43 PM, eric2800 wrote:

    I'll take Carmike Cinemas (CKEC). It has a huge amount of debt and the current ratio is very weak. These type of cinemas are extremely expensive. I have been to one and it is big and plays many movies but not many people are there at a given time. A family of four watching a movie and buying food and drinks will get the wallet emptied in a heart beat. My local cinema is way cheaper. I don't think they will do too good if the recession continues on. They also are a zack's #5 rank meaning earnings have been ratcheting down.

  • Report this Comment On December 15, 2009, at 9:56 PM, eric2800 wrote:

    I'lll take Carmike

  • Report this Comment On December 15, 2009, at 9:58 PM, FM5 wrote:

    O i know, There going to RUN the old Stile Rabbit Eats with a peace of Tin Foil to get the Radio signal & TV for the new 787 , or Maybe the Run a Cable from Comcast off the back Rudder, from the ground, or Maybe a peace of tin foil off one of the elevators and they can adjust it, as flying, to get the TV in better & clearer...

  • Report this Comment On December 15, 2009, at 9:59 PM, FM5 wrote:

    O i know, There going to RUN the old Stile Rabbit Eats with a peace of Tin Foil to get the Radio signal & TV for the new 787 , or Maybe the Run a Cable from Comcast off the back Rudder, from the ground, or Maybe a peace of tin foil off one of the elevators and they can adjust it, as flying, to get the TV in better & clearer...

  • Report this Comment On December 15, 2009, at 10:02 PM, jerryguru69 wrote:

    GM.

    They are destined for an IPO in 2010, but they do not yet have a corporate strategy, and it's been like CEO/division-head of the week. A leaking rowboat, no rudder, no oars, and no one who wants to be captain.

  • Report this Comment On December 15, 2009, at 10:06 PM, YubaBlue wrote:

    Blockbuster is taking diligent steps to rebuild their business to meet the needs of today's movie watchers. My bet is with the author on Borders.

  • Report this Comment On December 16, 2009, at 12:49 AM, sgarnick wrote:

    Blockbuster, BBI is set to fail. For one, it has failed to stay competitive in a market which is becoming more and more competitive. Netflix, and Coinstar's Redbox seem to have cornered the mail kiosk sectors respectively. Blockbuster was once known for its retail outlets, but as they project to close 40% of those stores, and customers eschew $4 rentals, and seek lower priced options, where does that leave BBI? Certainly Blockbusters foray into the Kiosk market with NCR can possibly sustain the company for a bit, but how can they expect those limited revenues to sustain a company that clearly has fallen out of favor in the rental market as the number of Youtube clips, pirated videos, and streaming Netflix options satisfy the public's appetite for media . Furthermore, these kiosks will cannibalize sales from their retail outlets. With little innovative ways to improve its cash bleeding ways, Blockbuster is doomed to fail in 2010.

  • Report this Comment On December 16, 2009, at 1:41 AM, jayan25 wrote:

    GM won't fail because the Chinese are going to buy it

  • Report this Comment On December 16, 2009, at 1:57 AM, buynholdisdead wrote:

    Peix, Pacific Ethanol, How can this business even survive with oil and natural gas so low. Is anybody even talking about Ethanol anymore. Watch as this company goes under because nobody is even thinking of using this as a bridge fuel especially when it takes more fossil energy than ethanol produced. Just for producing ethanol from corn it takes 29% more fossil fuels then ethanol produced. This stock is at .70 cents now and its just going to limp into next year.

  • Report this Comment On December 16, 2009, at 4:25 AM, chaz572 wrote:

    Palm. North American sales of the Pre will barely bring them to break-even against the headwind of the iPhone and the anchor of Sprint exclusivity, then will be dashed to pieces as Android picks up steam. European and Asian sales of the Pre won't amount to a hill of beans because those markets have had a wide selection of equally slick and featureful phones for years. Palm missed their window for greatness -- Pilot was ahead of its time; Pre is behind it. When the window was open, they were too in bed with Microsoft and Windows Mobile, nee CE, to jump through it. Now they're saddled with debt, short of earnings, and already over the peak of the last glory ride.

  • Report this Comment On December 16, 2009, at 5:10 AM, foolasia wrote:

    MBIA Inc (MBI) is my pick to go bankrupt. In fact, it should have gone under long ago. Take your pick, this company has absolutely no redeeming qualities from balance sheet, to income state, to management. The antithesis of a Hidden Gem pick, this company serves to remind us that Wall Street darlings and guru picks shouldn't distract main street stock pickers from sticking to common sense when picking stocks.

  • Report this Comment On December 16, 2009, at 9:18 AM, noryakerson wrote:

    Are companies allowed to fail anymore?

  • Report this Comment On December 16, 2009, at 10:15 AM, rbstack wrote:

    I own both SIRI and BBI, give me some holiday spirit and only publish good comments will ya'?

    Honestly I value the info on here, lets just hope for the best!

  • Report this Comment On December 16, 2009, at 10:38 AM, PokerRon wrote:

    I'm so fed up with Motley Fool putting the knife into Sirius.XM I almost certainly will not renew my Motley Fool subscription. It goes on and on, with never a lost opportunity. Perhaps with Gardner it's sour grapes because he didn't have the vision or guts to recommend a buy on SIRI when it was under 10 cents. Who's the FOOL now David?

    In spite of MF's constant down-beating, SIRI will survive, and in fact, will survive big time, so buy as much as you can.

  • Report this Comment On December 16, 2009, at 12:09 PM, caltex1nomad wrote:

    Rite Aid and Talbots

  • Report this Comment On December 16, 2009, at 12:30 PM, blaueskobalt wrote:

    Immersion Corporation (IMMR). Unprofitable. C-level turnover. No clear vision. Disjointed business segments. Litigation and more litigation. And the cherry on this sundae is an accounting scandal.

    The main argument against is that they have too much cash to fail in 2010 (then again, with the ongoing internal investigation of their financial reporting, they could have a lot less cash than we think). The last 10-Q they filed was for March, so the problems they are facing may be quite significant. Priced at over 3x sales, this is a good candidate for failure and/or shorting, IMO.

  • Report this Comment On December 16, 2009, at 1:44 PM, knudde wrote:

    Chrysler

  • Report this Comment On December 16, 2009, at 4:59 PM, cantbefoolish wrote:

    TSCM will fail. Followed by TMF. When SIRI breaks out it 2010, there will be less interest in these company's negative posts. Therefore less clicks, which translates to less ad revenue and more debt.

  • Report this Comment On December 16, 2009, at 5:36 PM, crprzyby wrote:

    radio shack...seriously who actually still shops there

  • Report this Comment On December 16, 2009, at 6:07 PM, topsecret10 wrote:

    If you mean seriously underperform,that one Is easy It's Abercrombie& Fitch (ANF) As a total failure I will go with Sirius.... Their customer service Is THE WORST I HAVE EVER SEEN IN MY LIFETIME.... TS

  • Report this Comment On December 16, 2009, at 7:33 PM, Fool wrote:

    More garbage from Motley Fool.

  • Report this Comment On December 16, 2009, at 7:50 PM, nuf2bdangrus wrote:

    Total failure canidate? Overstock.com. They've never made a dime in a business that TJX can do while paying for retail space. Pathetic. And their Management staff consists of a bunch of loonies.

  • Report this Comment On December 16, 2009, at 10:31 PM, Fool wrote:

    Motley Fool will fail in 2010. Sirius was given money by Liberty Media so it wouldn't fail you should do some research before you write a story. You fools write articles on Sirius every week and 50% of the time you say they are going to do good and 50% of the time you say they are a complete joke. Make up your mind.

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