6. Netflix (NFLX)
Performance: down 60%Profile: Netflix provides subscription-based Internet services for TV shows and movies in the U.S. and internationally. Its DVD-rental business was successful. The Scoop: In order to meet rapidly rising competitive challenges, Netflix has begun offering a streaming video service that delivers digital content to PCs, Internet-connected TVs and consumer electronic devices. The company also boosted prices for its popular DVD-by-mail and streaming service by 60% in a recession and, not surprisingly, lost 9 million DVD customers since June. Netflix recently said it expects a full-year net loss in 2012, worse than its earlier prediction of the same. It's losing focus and has a damaged brand image. Given those challenges, stay away from this one.
5. Bank of America (BAC) Performance: down 61% Profile: The bank is one of the largest financial institutions in the world, with lending operations in the consumer, small business, and corporate arenas in addition to asset-management and investment-banking divisions. The Scoop: The company's average annual share-price loss over the past decade is 5.4%, which should tell you all you need to know. But for background, its acquisition of troubled Countrywide Mortgage in 2008 is causing big write-offs and continued bad publicity. There are also potential legal liabilities of tens of billions of dollars from investor lawsuits because of that deal. Due diligence before an acquisition, anyone? Bank of America also faces the economic challenges that other U.S. banks do, including weak new loan growth and a low, flat yield curve. Bank of America's shares are down 4% Monday to lead the blue-chip Dow's decliners after The Wall Street Journal reported that the Federal Reserve is considering adopting rules by regulators in Basel, Switzerland, requiring major financial institutions to hold extra capital.
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