1. Ten Big Companies That Are Veering Toward Bankruptcy
Posted Sep 18, 2009 12:21pm EDT by Vincent Fernando and Joe Weisenthal in Investing,
Media, Products and Trends, Recession
Related: AMD, LVS, S, M, GT, MYL, HTZ
From The Business Insider, Sept. 18, 2009:
Despite a few green shoots in the economy and a rocketing stock market, many large companies
are still struggling to avoid bankruptcy.
A new report by Audit Integrity identifies some high-profile names "that have the highest
probability of declaring bankruptcy among publicly traded firms."
Which companies appear the worst off? We took the list and removed any company with a
market cap under $3 billion. We then ranked the remaining names by a simple measure of the
market's perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less
MC vs. EV, the less residual shareholders' value (above what debt holders can claim) the market
is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more
likely to go bankrupt.
1. Hertz
When you have tons of debt financing your fleet of cars, falling rental demand really hurts.
While the company raised new capital in May for some breathing room, Fitch and Moody’s
actually cut their ratings for the company in July.
Ignoring the downgrade, shares kept rallying and are now at over five times the March $2 low.
Best of luck.
Market Cap (MC)/Enterprise Value (EV) = 32%
2. Textron
What a tough time to be selling business jets.
Textron wrote down $2.3 billion its backlog this year after it canceled a new jet design, and
demand for its other aircraft-related offerings has plummeted.
Shareholders may be heartened by the company’s ability to push back some debt maturities
lately, but deteriorating credit quality at the company’s leasing arm makes the outlook uncertain at
best.

2. MC/EV=39%
3. Sprint Nextel
Sprint Nextel is bleeding customers, and could lose as many as 4.4 million net post-paid
subscribers this year.
This is a huge problem when you have large amounts of maturing debt over the next few years.
A recent Deutsche Telekom acquisition rumor offered some hope, but that appears to have
faded. Facing a difficult road ahead on its own, the company better keep its lawyers on speed-
dial.
MC/EV=41%
4. Macy's
Does anyone even shop at department stores anymore?
Same store sales will likely keep falling at Macy’s right through 2009. With $2.4 billion of maturing
debt over the next five years, the company is trying to cut costs, and has already reduced its
dividend.
Hopefully the US consumer will bounce back soon, and actually want to shop at Macy's.
MC/EV=47%
5. Mylan
In a classic case of management empire building, Mylan overpaid big time when it bought
Merck’s generic business back in 2007 and is now stuck with $5 billion of long-term debt as a
result.
From 2007 – 2008, the company lost over $1.3 billion very much due to goodwill write-downs.
While the company could earn $300 million this year, they’ll have to earn far more than that in the
future to make their debt manageable.
MC/EV=51%
6. Goodyear
Demand for Goodyear tires has sunk, and the company is saddled with massive debt and
pension obligations.
It doesn’t help that The United Steelworkers union prevents the company from proper cost control
by forcing factories to stay open.
Shareholders have to wonder how much value will be left of the company after bondholders and
the union members have their way.
MC/EV=53%

3. 7. CBS
Weak advertising and falling license fees have sent CBS's earnings off a cliff in 2009.
If they remain depressed for too long, the company could have trouble refinancing $3.2 billion of
debt coming due over the next five years.
It will really come down to whether or not CBS’s earnings collapse is merely cyclical, or the result
of structural trend whereby traditional TV is dying.
As a business blog, we can't help but feel partly guilty here.
MC/EV=55%
8. Advanced Micro Devices
When will AMD actually make money again? The question is becoming more important by the
day since it carries over $5 billion in long-term debt.
After losing almost $3 billion from 2007 – 2008, analysts expect the company to lose more money
in 2009 and 2010.
While the shares rallied from their February $2 low, they still appear stuck in a long-term down
trend from $40 highs way back in 2006.
MC/EV=55%
9. Las Vegas Sands
Las Vegas Sands over-expanded and over-levered in the last few years and now has over $10
billion in debt to deal with.
Despite jumping 13 times from their March low, Las Vegas Sands shares still face an uphill battle.
Conditions in Las Vegas are horrible, Asian expansion isn’t enough, and if this lasts too long then
LVS will end up in bankruptcy court looking like it bit off more than it can chew.
MC/EV=60%
10. Interpublic Group
As one of the largest advertising and marketing companies in the world, IPG was slammed by the
global recession.
As the company’s CEO said during recent second quarter results, the downturn “is proving
steeper and more lasting than expected”.
Revenues have fallen double digits and the company’s exposure to General Motors as its largest
client hasn’t helped.