Companies: Surviving To Thriving

Times are tough and, no matter what business you’re in, companies are struggling to keep the doors open through the “Great Recession.”

Fortune 500 companies and small start-ups alike are grappling with the worldwide slowdown that has shrunk payrolls and profits since late 2007.

Despite adverse conditions, some companies are not just surviving but thriving. We at WMB take a look at six of these high performers:

1. Amazon (NASDAQ: AMZN)

Amazon literally began in a garage, similar to how many large corporations started in this country. Amazon’s founder, Jeff Bezos believed the Internet could meet consumers’ needs in a different way. He began shipping books to his customers worldwide in 1995. His vision and sales plan proved to be profitable.

Amazon has grown to be the first place most shoppers go to when placing an order for a book. The company grew sales by 28% last year, even though 2009 was a tough year of deep sales declines for most companies and businesses throughout the world.

The company’s secret was to focus on the long term. Amazon plans to develop new products such as its Kindle 3. The firm plans to expand its market share and is always looking toward its next move.

2. Ford (NYSE:F)

Not too many years ago, the company founded by industrialist and inventor Henry Ford was in deep financial trouble, along with the rest of the American auto makers. The industry was plagued with recalls, safety issues and declining sales. It even looked like Ford might fail until CEO Alan Mulally took over the helm.
It took three years of losses, deep cuts in jobs and expenses, but Ford posted a $2.7 billion net income in 2009. The company also recently announced second quarter profits for April through June of $2.6 billion. Additionally, the company expects to end 2011 with less debt than cash. This is an amazing success story compared to a few years ago.

A complete overhaul, eliminating models from its line, cutting costs and revamping its image got Ford Motor Co. back in the game during a time when competitors, such as General Motors Corp., were on the verge of bankruptcy.

3. Domino’s (NYSE:DPZ)

It’s not easy to admit your product lacks appeal on national television, but Domino’s Pizza did just that. Motivated by a consumer survey (with video clips on TV), the company overhauled the recipe of its pizza, proving that change is good for business.

Under the new marketing change and new recipe, profit more than doubled in the fourth quarter of 2009, increasing sales for that quarter by $23.6 million. People must still like to eat.

The secret to Domino’s turnaround was novelty. The company changed the self-proclaimed cardboard crust and ketchup sauce to a new, improved pizza that brought people in the door.

Time will tell if they can sustain sales but, for now, the pizza giant has turned this new product into a financial success.

4. Snuggie

This company is a surprise success story. How many people would have believed this product would take off the way it did? Snuggie has been called a robe you put on backwards by “Tonight Show” host Jay Leno.

It has been parodied all over TV, but the Snuggie was undoubtedly last Christmas’ hit. The blanket with sleeves was purchased by more than 20 million people during 2009. While sales are not readily available, the product has turned out to be recession resistant.

The one thing we all did last year to save money was take fewer trips. While we were at home many of us turned the heat down and watched TV. The Snuggie is proof that novelty, the right price, and timing can translate into big bucks.

5. Intel (NYSE:INTC)

Intel last year recorded a profit of $2.89 billion; much higher than expected! Intel sat tight during the recession while client companies held off on computer purchases for their employees.

Now, the company is seeing an upswing, with profits soaring to a 10-year high. Intel’s secret to success is simply patience. By waiting for pent-up demand to return, it’s back to raking in cash.

6. Lego

Last year was a tough year for almost all toy companies, except for Lego. During 2009, when most companies were holding tight to ride out the recession, Lego’s profits soared 63 percent. With the toy market stagnant in the United States, Lego expanded to Asia and increased its sales in Europe.

A recent boost to Lego’s cash flow came when soccer star David Beckham admitted he was building a Lego Taj Mahal during his downtime; sales soared 663 percent! This proves celebrity endorsement can influence consumer buying more than other factors and boost profit dramatically.

The Bottom Line

The Great Recession in many ways may not be over, but it prodded corporate giants to think outside the box to not only survive but better position their company for future growth.

The companies profiled above demonstrate that with patience, innovation and an occasional dramatic change, you can overcome a deep recession and see profit even when competitors face extinction. And, of course, a well-placed celebrity endorsement doesn’t hurt either.

This post is from TechMan, WMB co-author who blogs about trends, issues and ideas affecting business, industry, technology and consumers. If you like this post, please share it with family, friends and colleagues!

Fake Electronics Take Tech Toll

There is a growing worldwide epidemic of counterfeit microchips, routers, and computers costing the electronics industry billions of dollars annually, and the problem has serious implications not only for business but for national defense and homeland security, analysts say.

The number of bogus electronic products has more than doubled, from 3,868 in 2005 to 9,356 in 2008, according to the U.S. Commerce Department. Counterfeit electronic parts cost the information technology industry about $100 billion a year, according to the not-for-profit National Electronics Distribution Association.

Typically, counterfeit electronic parts are less reliable than original design ones and may not work. Fake parts can highly compromise originally designed applications such as those involved with data storage, computer operations, and automotive functions.

A Saudi Arabian citizen was convicted earlier this year of purchasing and selling counterfeit Cisco components intended for use by the Marine Corps. These parts were intended for monitoring troop mobility in Iraq, according to the U.S. Justice Department.

“Counterfeiting is a very serious issue that impacts the entire high-tech industry on a global level, ’’ a Cisco public relations spokesperson said. “Cisco and other leading IT companies have been actively addressing this issue for several years now.”

U.S. Homeland Security Secretary, Michael Chertoff, recently raised the subject at a briefing attended by reporters from around the globe. Clearly, with the threat of increased terror activity globally, authenticity and integrity of electronic parts are growing concerns at all levels, Chertoff said.

Well-known brands hit hard by counterfeiting in recent years include OEM companies such as Intel, Advanced Micro Devices, NEC, Hewlett Packard, Xerox, and IBM. It’s so bad that distributors worldwide must now examine every part they receive. One distributor, PCX, headquartered in Huntington Beach, Calif., takes the defensive position that “a part is considered suspect until we prove otherwise.”

China is where the bulk of counterfeit electronic parts originate. The economic giant supplies many of these parts to the United States, according to a recent report by the Commerce Department. In many instances, parts are “recycled” from electronic waste sent to China as scrap.

It works this way: Workers dismantle mother boards, recover components, and remove part numbers and other corporate identification. Then the workers imprint forged dates, brand names, and other bogus product codes. These parts then make their way to electronic marketplaces and other brokers before being distributed globally by “knock-off” suppliers.

Besides China, other places responsible for this illegal practice include Taiwan, Singapore, Malaysia, and Eastern European countries, U.S. officials say.

Knock-off components even may be infiltrating traditional distribution channels. Within lots, parts may be “contaminated” with counterfeit components, all from the same authorized dealer. Ultimately, dealers must provide refunds in an effort to salvage their image and brand.

Many of the bogus parts are of such high quality that it is becoming increasingly difficult to ascertain “original” from “counterfeit.” To take it a step further, some dealers are affixing “anti-counterfeit” labels to verify authenticity. In order to stem the flow of these illegal components, potential victims are banding together.

The Defense Department and National Aeronautics and Space Administration are creating standards that help users avoid buying counterfeit parts, according to the Independent Distributors of Electronics Association, a nonprofit trade organization which teaches members how to detect bogus products. Many times when distributors have been known to sell fake parts they are blacklisted.

The process of detecting counterfeit parts is increasingly difficult since hardware is getting more complex. Many of these parts require a microscope to determine their authenticity. Under a microscope, examiners determine the placement of the logo, the quality of the vacuum seal, and the depth of the etchings to help identify potential fraud.

The counterfeiting game also is moving to a higher level, with some culprits saving shavings and material coatings from original parts to make it even more challenging for suppliers to detect differences.

Even so, turnabout is fair play. Some suppliers de-pot or de-encapsulate ICs, processors, and memory chips to inspect the interior die for markings and dates. Other suppliers are even X-raying their incoming parts to determine authenticity.

Chipmakers, like Intel, have developed software to help customers identify the processor inside a computer to make sure that it’s performing up to OEM standards.

Experts in the electronics industry warn that supply chains are becoming more global and less transparent. No one can be sure which parts are going into which computers. These computers can affect everything from national security, to air traffic control towers, and weapons systems.

This post is courtesy of TechMan who tracks trends and issues in business, industry and technology.