World-famous companies seem like unsinkable colossuses that will survive the most severe storms on the sea of business. However, many of them had to "get out of the grave", sometimes more than once.
In this article, you will learn about ten popular brands that were very close to bankruptcy.
10. BMW
BMW emerged from World War II with serious financial and infrastructural problems. Its factories had been bombed, and the company was temporarily banned from resuming car production. So it survived by selling household goods, bicycles, and later, low-power motorcycles.
Poor sales of its first post-war car, the 501, and small profits from the three-wheeled Isetta subcompact had left BMW in financial trouble. The 507 sports roadster, introduced in 1956, failed to live up to expectations, and its high production costs added to the burden on the carmaker.
The situation was so dramatic that BMW almost ended up in the hands of Mercedes-Benz. But a few months before the final negotiations on this deal, the BMW 700, a small sedan with a rear engine and a unibody, came to market.
With superb handling and easy maintenance, the 700 was an immediate hit and put BMW back on track.
This was followed in 1962 by the New Class series, which re-established BMW as a solid and financially independent carmaker. It was the New Class that eventually gave birth to the iconic 3 Series and 5 Series models.
9. The Walt Disney Company
Walt Disney, director, animator, and creative genius, founded his first company in 1920. Laugh-O-Gram, which included five other key figures besides Disney, created short commercial films and cartoons. Disney even had a deal with a New York distribution company to show his films in theaters.
But in 1922, things started going wrong. The distributor began extorting money from Disney, leaving the director short of the funds he needed to cover his bills. Faced with mounting debts, Walt Disney declared bankruptcy in 1923.
That same year, Walt Disney created a new film company with a loan from his parents and brother. His debts were written off and the new company was properly funded, and in 1928, Disney created his most iconic character, Mickey Mouse. Almost a decade later, he released Snow White and the Seven Dwarfs, and the rest is history.
8. Starbucks
Due to the global recession and strong competition from Dunkin Donuts and McDonald's, Starbucks shares lost 42% of their value in 2007.
With the introduction of a new line of hot sandwiches and a growing focus on music and in-store merchandise, the company has lost the coffee shop flavor that made it popular.
Howard Schultz returned to his CEO position in January 2008 and set about modernizing the company. He began by narrowing Starbucks' focus and putting coffee first. He also cut 600 stores and laid off 12,000 workers.
In 2008, Starbucks closed all 7,100 of its U.S. stores for a few hours to retrain its employees. It wasn't cheap, but it got some press. The company also implemented a loyalty rewards program to keep customers coming back during the economic downturn.
By the end of 2010, the company was back on track, with nearly $11 billion in annual revenue.
7. Nintendo
In 2014, the failure of the Wii U handheld meant the company suffered three consecutive financial years of operating losses for the first time in its 125-year history, leading some industry observers to question whether Nintendo should still be making game consoles.
The naysayers were proven wrong in 2017 with the release of the Nintendo Switch, a hybrid handheld and gaming console that lets you play games on your TV or the built-in screen of a mobile tablet.
After integrating its console and handheld divisions in 2013, Nintendo was able to move game developers between different projects, which was used to ensure a steady release of well-received games.
The company also fixed the Wii U's long boot times by creating a streamlined process that allows players to turn on the device and get into gameplay with three button presses.
6. Lego
In 2003, facing declining sales and a slew of failed business ventures, the iconic company nearly went bankrupt. Its debt at the time was $800 million.
However, Lego's fortunes improved when Jørgen Vig Knudstorp took over as CEO in 2004. He cut costs in several ways, including:
- got rid of non-core assets such as theme parks,
- reduced the variety of parts for designers,
- halved the time from the start of development to the launch of products into production,
- moved some of its production from Denmark to less expensive areas of Mexico and Central Europe.
Lego has also partnered with video game companies and film studios to create crossover media. The Lego Movie, produced by Warner Brothers in 2014, was a huge hit, helping Lego increase its profits by 15% compared to the previous year.
The company also encourages its fans to submit their own projects and ideas, with winning entries receiving 1% in global sales after the product's release.
5. Tesla
Closest we got was about a month. The Model 3 ramp was extreme stress & pain for a long time - from mid 2017 to mid 2019. Production & logistics hell.
— Elon Musk (@elonmusk) November 3, 2020
At the beginning of 2021, the market capitalization of Elon Musk's company exceeded $770 billion, ahead of such giants as Facebook and Tencent.
However, in one of his Twitter posts, Musk admitted that Tesla was “a month” away from bankruptcy during the Model 3 launch (from mid-2017 to mid-2019).
Musk has often spoken about what he calls “manufacturing and logistics hell” when a new electric car enters mass production. But Tesla executives never revealed until 2020 how short the runway was before the company could face bankruptcy.
4. Nokia
Between 2007 and 2012, Nokia lost market share to Apple and Android devices. But thanks to a successful turnaround, Nokia today exists as a $28 billion company and is one of the leaders in the networking equipment market.
In 2013, the company sold its smartphone business to Microsoft for $7.6 billion. Nokia then turned its attention to its network infrastructure business.
In June 2013, the Finns paid $2.2 billion to gain full control of a joint venture with Siemens to produce telecommunications equipment. And in 2015, Nokia bought its competitor Alcatel-Lucent for $16.6 billion.
However, Nokia has not completely “tied up” with smartphones. In 2016, Microsoft sold Nokia’s mobile business to a Finnish company called HMD Global. Now it is engaged in the development and sale of devices under the Nokia brand, and the company of the same name receives royalties for patents.
3. General Motors
In 2009, the United States launched one of the most remarkable interventions in the private sector in the country's history. The government invested nearly $50 billion in General Motors in exchange for 60% shares of the bankrupt automaker.
Then-CEO Fritz Henderson asked more than 400 of the company's 1,300 executives to step down, and he followed up with cuts to dealerships, employees, and entire divisions like Pontiac and Saturn. Thanks to these changes, a much-slimmed GM had achieved 15 straight quarters of profitability by the end of 2013.
But 2014 brought bad news: a faulty ignition switch caused multiple fatal crashes and the recall of nearly 30 million vehicles, a move that cost GM more than $4 billion.
In the years since, the company has rebounded under the leadership of Mary Barra, the company's first female CEO and a GM veteran.
2. Marvel
Near-death experiences are common among Marvel characters, but so was the company that created them.
Marvel went bankrupt in late 1996 after the comic book collector market collapsed. With the help of Isaac Perlmutter and his toy company Toy Biz, it managed to dig itself out of the financial hole in July 1997 and quickly found a stable footing in Marvel Studios, which had been created shortly before the bankruptcy.
While previous Marvel film projects had been delayed after being sold to major studios, the new studio allowed Marvel to speed up the process by commissioning scripts and hiring key actors and directors. Films like Blade, X-Men, and especially Spider-Man were box office successes, and Marvel enjoyed a huge boost in comic book sales and other licensing opportunities.
But the lion's share of the profits went to studios that owned the rights to Marvel characters, like Sony Pictures. The first two Spider-Man films grossed $3 billion worldwide, but Marvel got just $62 million of that.
Ultimately, Marvel's board entered into a potentially risky deal with Merrill Lynch to finance the production of Marvel films from start to finish. And the first film made under the new deal was Iron Man. It grossed nearly $600 million worldwide.
The film's success inspired Disney to acquire the company for $4 billion in 2009 and was instrumental in creating the Marvel Cinematic Universe, which has only grown since.
1. Apple
Today it is almost impossible to imagine a world without Apple, but in 1997 the company was on life support when Steve Jobs returned after a long break.
According to Walter Isaacson's biography of Jobs, the company was 90 days away from bankruptcy.
Apple's recovery began with a $150 million investment from Microsoft. It was part of a peace pact Microsoft made to protect itself from antitrust charges. Bill Gates's company kept its biggest competitor afloat.
Jobs then set about cutting Apple's product offerings so the company could focus on selling a small number of innovative devices. He laid off 3,000 employees and discontinued about 70% Apple products, including the Newton MessagePad.
The measures paid off the following year, with the release of the iMac. This consumer-friendly desktop computer with a sleek, translucent design and easy Internet setup sold nearly 800,000 units in its first five months. The product's success made 1998 Apple's first profitable year since 1995.
Today, Apple is a $300 billion company and synonymous with attractive gadget design. But none of this would have happened without Microsoft's financial help and Steve Jobs's titanic efforts.
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