Diary of a Financier

Borders on the Brink & Other Duopoly Demises

In Idiosyncrasy on Tue 1 Feb 2011 at 19:22
  • Borders may file for bankruptcy as soon as next week.
  • There’s been a pattern of bankruptcies from duopolistic businesses in this recession.
  • If another duopoly partner has to fail, I’ll watch Kodak.

As Borders (BGP) considers bankruptcy, I have to record a few thoughts here in my Diary.

First, Downtown Josh Brown over at The Reformed Broker was all over this, if I remember correctly.   (Although I can’t find much about BGP beyond Pershing/Ackman in searching his site, I’m pretty sure he pounded the table on BGP for the past year.)  If I’m not misremembering that, kudos to him for a great call.

Second, this Great Recession has landed a major blow upon America’s major duopolies. Consider the list of victims:

  1. Circuit City (survived by Best Buy)
  2. Linens N Things (Bed, Bath & Beyond)
  3. Blockbuster (Netflix)

What’s next? Pepsi (PEP)? Lowe’s (LOW)? Target (TGT)? Morgan Stanley (MS)!?  Probably not, but how about…

  1. Moody’s < S&P
  2. Schick < Gillette
  3. Airbus < Boeing
  4. UPS < FedEx
  5. DC Comics < Marvel
  6. AMD < Intel
  7. Dish Network < DirectTV
  8. Kodak < Fujifilm

That last one has my nomination.  Even with some of the ugliest ratios I’ve ever seen, Fujifilm (FUJIY.PK) beats the pants off Kodak (EK), which seems trapped like poop in a toilet-bowl swirly to hell.  Too much time litigating patents, not enough time working on profits: the Street expects a 12% decine in EK profits over each of the next five years.

Funny that the failures in the Cournot duopolies mentioned have all failed to keep up with the times, reinvent themselves, and invest in their business.

What other living duopolies would you add to that list?

Further, what others belong on the memorial list of duopolies past?

Personally, I’d add a few others, like Anheuser-Bush (now owned by InBev) v. MillerCoors (a joint venture with SABMiller) or Verizon v. AT&T.   In the way that I wanted Brad Pitt & Angelina Jolie to kill each other half way through Mr. & Mrs. Smith, I kind of hope those pairs take each other out.

–Romeo

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