The most-hated companies in America
Some of the nation's biggest and busiest -- including Facebook, Goldman Sachs and AT&T -- are among 24/7 Wall St.'s 10 names we loathe most.
Customers, employees, shareholders and taxpayers hate large corporations for many reasons. 24/7 Wall St. reviewed a long list of companies for which there is substantial research data to choose the 10 most hated in America.
Research comes in two sets. One is public research about consumer satisfaction, customer care, pricing of products and services, and brand impressions. Wall St. research takes into account another set of factors, which include current earnings, profit forecasts, product development and quality, and brand valuations.
Some of the companies are widely despised because of the businesses they are in. In an economic environment where resources are stretched, an airline or retail operation that has millions of customers is likely to make a lot of enemies. Similarly, banks and other corporations with a large number of retail outlets are at a disadvantage compared with businesses with few customers. Some of the corporations on this list also have had to fire significant numbers of employees because of the recession. Downsizing causes poor morale, increases the workload of the remaining staff members and affects customer satisfaction when service is poorer.
We examined each company based on several criteria. We considered total return to shareholders in comparison with the broader market and other companies in the same sector during the past year. We reviewed analyst opinions on those companies that are public. We analyzed data from a broad array of sources, including Consumer Reports, JD Power, the MSN/Zogby Poll, ForeSee and the University of Michigan American Customer Satisfaction Index. We also considered negative press based on 24/7 Wall St.'s analysis of media coverage and the Flame Index, which uses a proprietary algorithm to review more than 12,000 websites and ranks companies based on the frequency of negative words. Finally, we considered the views of taxpayers, Congress and the White House where applicable.
Several companies that should have been on the list based on performance and public perception during the financial crisis did not make it. For example, it would be easy to argue that mortgage giants Fannie Mae and Freddie Mac should be here. The bankruptcy and maintenance of the two by the federal government will cost taxpayers between $224 billion and $360 billion, according to the Federal Housing Finance Agency. But Fannie Mae and Freddie Mac are no longer stand-alone companies in any normal sense. Their shares have been delisted. Each is in effect a ward of the U.S. government with no ability to control its own fate through the actions of management or public shareholders.
The U.S. Postal Service could also be a candidate for the list. It has cost taxpayers billions of dollars, and it lost $5.1 billion in its last fiscal year alone. However, the Postmaster General and his staff have little or no control over the eventual fate of the USPS. Congress decides how and to what extent it will be funded. That means Congress essentially controls how many workers and offices will exist and, based on funding, how often the mail will be delivered.
- Related: The worst product flops of 2011
It is worth noting that some of the companies on the list may have done very poorly by some measures, and well by others. A few of the most hated companies have had good stock performances. Others may have satisfied customers. All of this was taken into account when the decisions for the final list were made.
The following are 24/7 Wall St.'s 5 most-hated companies for 2011, in no particular order.
Facebook has more than 800 million users. Any company of this size is sure to have some detractors. Compared with other leading social media sites, however, Facebook has the lowest customer satisfaction score from the American Customer Satisfaction Index. The site has repeatedly irked users by neglecting personal privacy. Notable events include the introduction of facial recognition software, which spurred an investigation by the European Union, and the Facebook timeline. Facebook received significant negative press for forcing new settings on users that change how their personal information is shared with other people. CEO Mark Zuckerberg has only recently said the company will no longer do this. According to the MSN Money-IBOPE Zogby International customer service survey for 2011, 25.9% of Facebook users described the company's customer service as poor -- the lowest rating.
2. American Airlines
American's parent, AMR, filed for Chapter 11 bankruptcy in November 2011. That virtually wiped out the value of the holdings of every shareholder. American recently was picked as the worst airline for customer service by the annual Middle Seat scorecard, published in the Wall Street Journal. "For the past five years, American has been among the worst three airlines at on-time performance, a key measure of an airline's operation since it impacts mishandled bags, bumped passengers and even canceled flights and customer complaints," the survey's authors said. The report states that the airline was the worst among major carriers last year for baggage handling and canceled flights, nixing 70% more flights than United (UAL) and Delta (DAL). With a score of 63 in the American Customer Satisfaction Index section on airlines, American falls near the bottom, well below leader Southwest (LUV), which has a score of 81.
AT&T (T) recently received the lowest score given by JD Power for wireless customer care performance. It also was given the lowest rating for customer service by ACSI. AT&T has been dogged by problems with its 3G network, which are now largely behind it. AT&T was attacked by both the government and press for what many observers saw as an attempt to set up a monopoly through its buyout of T-Mobile. Consumers feared the combined company would have extraordinary powers to set prices. The wireless carrier also received the lowest satisfaction rating for cellphone standard service providers, according to Consumer Reports. The MSN Money-IBOPE Zogby International customer service survey reports that 26% of customers rate service as poor.
Nokia (NOK) has punished its shareholders as its percentage of the smartphone market has dropped quarter after quarter. Its stock is down 50% in the past year. Nokia likely will lose its lead as the top handset company in the world to Samsung sometime this year. Nokia was tied for lowest overall satisfaction in JD Power's 2011 Wireless Traditional Mobile Phone Satisfaction Study. It also has received the lowest ACSI score for wireless telephones. According to Interbrand, Nokia's brand value has dropped 15% from last year. Nokia has tried to salvage its prospects through an agreement with Microsoft (MSFT), whose Windows OS will be used in Nokia smartphones. (Microsoft owns MSN Money.) Despite rave reviews for the new Windows Mobile, a partnership with the weakest mobile OS maker only makes Nokia's fortunes worse.
5. Goldman Sachs
Goldman Sachs' (GS) poor reputation was cemented when the government sued it for fraud in 2010. The company settled with the government for $550 million, but that was viewed as little more than a slap on the wrist because of the bank's immense wealth. And the fraud accusations have not stopped -- they have actually accelerated. Goldman faces a set of suits over mortgage instruments it sold worth a total of $15.8 billion. The Federal Housing Finance Agency in September accused Goldman of misrepresenting the quality of $11.1 billion worth of residential mortgage-backed securities. In the cases in which Goldman has settled claims, the press has not always been favorable. According to The Wall Street Journal, Goldman agreed to forgive 25% of principal balances on 143 mortgage loans to borrowers in New York, or $13 million of a total principal balance of $52 million. The $13 million is less than a senior banker at Goldman might make in a year. Perhaps those homeowners are part of the Occupy Wall Street protests against big banks, for which Goldman is the poster boy.