America's Shrinking Corporate Giants

MSNBC ran an interesting article last week documenting the 8 large U.S. corporations that have seen the greatest drop in revenues since 2006. Some, such as AIG and GM, should obviously come as no surprise. Here is the introduction to the story:

It is rare for one of America’s largest companies to lose a third or more of its sales in a brief time. When it happens, it is usually either because of market or economic forces, or because of a designed refocusing. 24/7 Wall St. identified the eight largest American companies whose revenue fell the most in the past five years and analyzed the reasons behind the drops.

Large companies can lose a significant amount of their revenues because they get into a great deal of financial trouble. A company may lose part of its customer base quickly because of economic forces, or it may be part of a financial catastrophe. As a result, the company’s revenue declines, and it begins to post large losses. In cases like these, companies often are forced to sell divisions to fund their survival. Alternatively, companies may close some of their operations that drain capital. General Motors and Citigroup are good examples of this category. Each moved from relative prosperity to difficulty in a very short period.

The other reason large companies shrink quickly is by design. The management of a corporation created by merger or acquisition activity may find that some of its pieces no longer fit together. One division may grow at a much higher or slower rate compared to others. Also, the way the stock market values one part of a large corporation may change because it is in a category Wall Street no longer favors. That, in turn, becomes a burden on the stock price of the entire enterprise. Telecom hardware company Motorola Solutions and media giant Time Warner fall into this category. Each is smaller than it was five years ago because it spun out a major business.

24/7 Wall St. used Capital IQ to screen the largest companies in America based on total revenue in 2006. We then screened for those that had the largest drops in total revenue between 2006 and 2010. Most of the eight companies on this list lost a third of their total revenue over the period, and some lost more than half. The list is ranked by total revenue loss from greatest to least.

More details for each company are included at the link above, and the list itself is below:

8. The Home Depot
Drop in sales: $6.8 billion
2006 revenue: $73.0 billion
2010 revenue: $66.2 billion
Percent change: -9.3 percent

7. Citigroup
Drop in sales: $14.3 billion
2006 revenue: $75.7 billion
2010 revenue: $61.4 billion
Percent change: -18.9 percent

6. Time Warner
Drop in sales: $14.9 billion
2006 revenue: $41.8 billion
2010 revenue: $26.9 billion
Percent change: -35.6 percent

5. Altria
Drop in sales: $17.9 billion
2006 revenue: $34.8 billion
2010 revenue: $16.9 billion
Percent change: -51.5 percent

4. Motorola Solutions
Drop in sales: $27.5 billion
2006 revenue: $35.3 billion
2010 revenue: $7.8 billion
Percent change: -77.9 percent

3. AIG
Drop in sales: $31.3 billion
2006 revenue: $108.9 billion (2005)
2010 revenue: $77.6 billion
Percent change: -28.7 percent

2. Ford
Drop in sales: $47.9 billion
2006 revenue: $176.9 billion (2005)
2010 revenue: $129.0 billion
Percent change: -27.1 percent

1. General Motors
Drop in sales: $59.5 billion
2006 revenue: $195.0 billion
2010 revenue: $135.5 billion
Percent change: -30.5 percent

Bonus: "I move so slow, a steady crushing hand...holy shit, there's a company in my back"