Memorable companies that vanished
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Once upon a time, there was a computer brand called Compaq. It was one of the largest sellers of PCs in the entire world in the 1980s and 1990s. Then 2002 comes and Hewlett-Packard Corp. merges with the company. The end. Well, sounds like a short-lived story, and in actuality, it was. Compaq existed for only 20 years (1982-2002) before being gobbled up by then-CEO Carly Fiorina of HP to make HP's market share as large as possible. The Compaq brand remained in use by HP for lower-end systems until 2013 when, without warning, the Compaq name was quietly discontinued.
PaineWebber was never the biggest brokerage on Wall Street, but it was part of the solid middle. It was founded in 1880 by William Alfred Paine and Wallace G. Webber. It survived a securities fraud scandal in the late 1930s, and by 1980 it had 161 branch offices in 42 states and six offices in Asia and Europe. In 2000, it merged with UBS AG, to become UBS PaineWebber, but in 2003, "PaineWebber" was dropped and replaced with UBS Wealth Management USA.
In the late 1980s and early 1990s, Merry-Go-Round was the darling of Wall Street and the suburbs where teens sold $70 rayon shirts for minimum wage plus commission. Its 536 stores comprised Merry-Go-Round, Dejaiz, Cignal and Chess King. Sadly, the mid-'90s teen did not want to wear v-neck sweater vests, mesh, or paisley rayon blouses. The business was so overtly trendy it tipped over the edge. Merry-Go-Round filed for Chapter 11 bankruptcy protection in 1994, but couldn't stay afloat and liquidated all its assets in 1996.
Memorable companies that vanished
Eastern began as a mail carrier for the U.S. Postal Service in the mid-1920s, but through acquisition and expansion came to dominate much of the domestic travel industry along the profitable East Coast corridor by the 1950s. The airline thrived into the 1970s, when it was one of the "big four" major U.S. airlines. However, the carrier struggled after the Air Transportation Deregulation Act of 1978. Deteriorating labor relations forced it into bankruptcy in 1989, at the time the largest airline bankruptcy in U.S. history. It ceased operations in 1991.
Has there ever been a company that had such a spectacular rise and fall as this Houston-based energy company? Enron had 22,000 employees and claimed revenues of $111 billion in 2000 before its massive accounting fraud came to light. It is now the symbol of corporate fraud and corruption and it's 2001 bankruptcy was the largest in U.S. history.
Pan American World Airways, or Pan Am, was an international airline that was in business from 1927 through 1991, when it ceased its operations after over a decade of mounting financial losses and declared bankruptcy. The company, despite being defunct for 17 years, is still well remembered in pop culture. The blue circular logo has made such an impression that it is put on designer travel bags to signify traveling in luxury today.
Standard Oil (1870-1911) was the dominant oil company in the world until it was felled by the Sherman Anti-Trust Act of 1890. In 1911, the Supreme Court ruled that Standard Oil had violated the Act through its tactics of using low prices to wipe out competitors. The result was a breakup of the company into what is now Chevron, Exxon Mobil and ConocoPhillips.
Arthur Andersen (1913-2002) spent decades as a leading accounting and consulting firm. Founded in 1913, it was once a member of the "Big 8" accounting firms, which later became the "Big 5." Andersen's downfall was its role as Enron's auditor. It used its credibility to bless Enron's special purpose entities and a whole host of illegal accounting. In 2002, the firm voluntarily surrendered its licenses to practice as CPAs after being found guilty of criminal charges, resulting in the loss of 85,000 jobs.
Many of us remember the car used in the "Back to the Future" films, which was the trademark stainless steel DeLorean. The DeLorean Motor Co. was formed in 1975 by auto executive John DeLorean, whose gull-wing door sports car model became the image for the entire company. Unfortunately, the DMC-12 sports car suffered from lack of actual demand, even with the huge amount of publicity. In 1982, DeLorean Motor went into receivership and bankruptcy as a result.
Pets.com was a dot-com enterprise, headquartered in San Francisco, that began operations in August 1998 and closed in November 2000. A high-profile marketing campaign gave it a widely recognized public presence, including an appearance in the 1999 Macy's Thanksgiving Day Parade and an advertisement in the 2000 Super Bowl. It's popular sock puppet advertising mascot was interviewed by People magazine and appeared on Good Morning America. Sales rose dramatically due to the attention but the company was weak on fundamentals and lost money on most of it's sales. The sock puppet toy was the last item available for order on the Pets.com site at the time of it's shutdown in 2000. $300 million of investment capital vanished with the company's failure. From it's stock IPO price of $11.00 per share on the Nasdaq in 1998, to liquidation of $0.19 per share in (268) days made it the greatest dot-com disasters in history.
For a time WorldCom was the United States's second largest long distance telephone company (after AT&T). WorldCom grew largely by acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of the internet backbone. It was headquartered in Clinton, Mississippi, before being relocated to Virginia. On November 4, 1997, WorldCom and MCI Communications announced their US$37 billion merger to form MCI WorldCom, making it the largest corporate merger in U.S. history. On September 15, 1998, the new company, MCI WorldCom, opened for business, after MCI divested itself of its successful "internetMCI" business to gain approval from the U.S. Department of Justice. In late 2000, MCI WorldCom renamed itself simply "WorldCom". By the end of 2003, it was estimated that the company's total assets had been inflated by about $11 billion. This made the WorldCom scandal the largest accounting fraud in American history at that time. On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time. On April 14, 2003, WorldCom changed its name to MCI, and relocated its corporate headquarters from Mississippi to Virginia. The company emerged from Chapter 11 in 2004 and was acquired by Verizon Communications on February 14, 2005 for $7.6 billion. Former CEO Bernie Ebbers was sentenced to 25 years in prison after being convicted of securities fraud, conspiracy, and filing false documents.
One of the biggest calamities of the current recession is the fall of the once highly regarded (and onetime fourth-largest) Wall Street investment firm. It was forced to file for bankruptcy protection on September 15, 2008, the largest corporate filing in the history of U.S. bankruptcy court. As a result, the company's North American investment banking and trading businesses and New York City headquarters were sold to British bank Barclays. Some of Lehman's U.S. businesses, including wealth management firm Neuberger-Berman, continue to operate as stand-alone entities under new ownership. And because of the company's global reach, its bankruptcy proceedings were complex, ongoing, and have resulted in the closing of 80 of the bank's smaller subsidiaries.
Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and was its chairman until his arrest on December 11, 2008. The firm was one of the top market maker businesses on Wall Street. He employed at the firm his brother Peter, as Senior Managing Director and Chief Compliance Officer; Peter's daughter Shana Madoff, as the firm's rules and compliance officer and attorney; and his sons Andrew and Mark. On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that the asset managment unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie". The following day, FBI agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted multiple investigations into Madoff's business practices, but had not uncovered the massive fraud. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme. The Madoff investment scandal defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the mid-1980s and may have begun as far back as the 1970s. Those charged with recovering the missing money believe the investment operation may never have been legitimate. The amount missing from client accounts, including fabricated gains, was almost $65 billion. The SIPC trustee estimated actual losses to investors of $18 billion. On June 29, 2009, Madoff was sentenced to 150 years in prison, the maximum allowed. Peter has since been sentenced to 10 years in prison, and Mark committed suicide by hanging exactly two years after his father's arrest. Andrew died of lymphoma on September 3, 2014 at the age of 48. The disgraced financier’s wife, Ruth, plunged into a spiral of illegal drug use, wandering around her 989-square-foot apartment in Connecticut, stoned on pot and guzzling thousands of dollars worth of wine from the family’s collection. Ruth is a sad figure according to a source. She drives a modest Toyota Prius after the government allowed her to keep a $2.5 million fraction of the billions her husband once had in the bank, and never calls him.