With the New Year fast approaching it feels like a good time to look back at the year that was for business in the US.
US stocks have pretty much risen in a straight line throughout 2013, hitting record highs along the way and helping to restore investor confidence which, let’s not forget, was much shakier this time last year.
While stocks have continued to rise, unemployment has continued to fall, also contributing to confidence returning to the market.
But despite the improved conditions there were still no shortage of business boneheads in the US during 2013. Here is my list of the top five biggest business blunders for the year.
5. Carnival Cruises
Like the cruise line industry needed any other reminders of why being stranded on a boat could easily turn into your worst nightmare. Just two years after the British-American company’s Costa Concordia ran aground off the coast of Italy, 3143 passengers aboard the cruise line’s Carnival Triumph were left adrift in the Gulf of Mexico for four days in February after an engine room fire.
The US media soon dubbed it the “poop cruise” after descriptions from passengers that the lack of electricity and running water had meant those four days were like floating inside a “hot port-a-potty.”
In shades of Tony Hayward sailing on his yacht during BP’s Deepwater Horizon catastrophe, Carnival’s chief executive Micky Arison was seen courtside watching the Miami Heat basketball team he owns while the Triumph remained adrift.
In the wake of the disaster, Arison stepped down after 34 years as chief executive of the world’s largest cruise line. Not only did Carnival experience a sharp drop off in people wanting to sail away with them, the entire cruise line industry saw a 20 per cent slide in demand.
4. Time Warner Cable
If Carnival was the drag on the cruise line industry then Time Warner was the equivalent to cable TV businesses. Its month-long dispute with CBS over licensing fees showed yet again that content is king and when CBS withheld its programs, including the final season of Dexter, it reminded Time Warner customers that in the age of internet-streaming services like Netflix and Hulu, they don’t need traditional cable.
In September, Time Warner eventually gave in, not wanting to lose any of its sports viewers as football season kicked off. By the end of the stoush Time Warner had shed 306,000 of its 11.7 million US customers, half of which they attribute to the programming blackout. The company’s profit also sank 34 per cent for that quarter.
In many US cities like New York, yoga is akin to religion and by-and-large Lululemon’s yoga pants are what the faithful yoga junkies wear. That was until March, when the company recalled its black yoga pants because of “increased sheerness.”
They worked to fix the quality control issue but it resurfaced again in November.
Lululemon’s founder Chip Wilson compounded the issue when he suggested that some female customers shouldn’t be wearing the product because their thick thighs were rubbing together and causing the material to thin.
Earlier this month Wilson stood down as chairman of the company he founded 15 years ago, all while learning the lesson that companies should not blame their customers for their own mistakes.
2. Silk Road
Even illegal businessmen suffer from brainless decisions. None more so than 29-year-old San Francisco man Ross Ulbricht, who police allege used the handle Dread Pirate Roberts (a take-no-prisoners character from the 1987 film The Princess Bride) to mastermind a billion-dollar black market bazaar to buy and sell drugs, fake passports, stolen credit card information and driver’s licenses.
Communications were bounced off servers around the world and online currency Bitcoin was used to further make transactions difficult to trace on what is known as the “dark web”.
But Dread Pirate Roberts wasn’t content with $US1.2 billion in sales in the past two years and instead let his new found power go to his head. In June he used his Twitter account to send a tweet taunting police, saying "Illegal drugs home delivered and our cops are clueless."
Then he is alleged to have commissioned two for-hire kills, telling one alleged hitman that “necessities like this do happen from time to time for a person in my position” and that the hit “doesn’t have to be clean.”
Ulbricht denies he is Dread Pirate Roberts but whoever the mastermind is would do well to remember the old adage that “the biggest challenge after success is shutting up about it.”
Having been hit with the biggest fine in US corporate history this year it is hard to award the top spot to anyone other than JPMorgan.
Chief executive Jamie Dimon may still have a job this Christmas but his bank is $US13 billion worse off after settling a civil case in relation to mortgage bonds it sold investors before the 2008 financial crisis. JPMorgan still has criminal proceedings pending, which is unlikely to make for much of a happy new year.
The bank also managed to botch its public relations pitch to address concerns about its conduct via Twitter. The Q&A session was cancelled after the firm’s AskJPM hashtag was flooded with snide and nasty comments.
Mathew Murphy is a Walkley Award winning journalist based in New York.