TOP 10 Business Blunders

Source : FORBES.com
Blunderer: Ford Motor
Blunder: The Edsel
In the mid-1950s, flush with the
exceptional success of the
Thunderbird, Ford wanted to create a
new model to compete head-to-head
with General Motors' Oldsmobile.
(The Ford Lincoln had served that
purpose, but it was getting a
makeover to go against GM's higher-
end Cadillac.) Ford's solution: the
Edsel, named for founder Henry
Ford's son. Despite all the hype--
including a television special called
The Edsel Show--Ford whiffed on
three fronts: style (the car looked too
much like other Ford models), size
(too large, given the growing trend
toward compact cars), and price
(initially intended to be priced
between a Lincoln and the lower-tier
Mercury, the Edsel actually fell within
Mercury's price point, and thus
Blunderer: Motorola
Blunder: Iridium
Backed by $6 billion from Motorola,
satellite-telephone provider Iridium
launched in November 1998--and
filed for Chapter 11 bankruptcy just
nine months later, citing "difficulty
gaining subscribers." Iridium's
downfall: the rise of mobile phones
and cellular networks. Absentee
customer-service reps and annoying
flaws in the company's Web site that
made it difficult to apply for service
didn't help, either.
Size Of Blunder: $8 billion
Blunderer: Enron Executives
Blunder: Greed and deception
The now infamous Houston-based
energy company created offshore
entities to hide huge losses--
maneuvers that even a careful read
of its opaque financial statements
could hardly detect. Analysts turned
sour on the company in the summer
of 2001; Enron filed for bankruptcy
before year's end. From its peak
market cap of $78 billion, the equity
is now worthless, and key
executives--including Chief Operating
Officer Jeffrey Skilling and Chief
Financial Officer Andrew Fastow, are
doing jail time on charges including
securities fraud and insider trading.
Size Of Blunder: $93 billion
Blunderer: Czar Alexander II, On
Behalf Of Russia
Blunder: Sale of Alaska
Fearing he would lose Alaska by
force, Czar Alexander II advised
Russian minister Eduard de Stoeckl to
offer a 586,412 square mile ice
block--Alaska--for sale to the U.S.
Following an all-night negotiation, the
agreement was signed March 30,
1867. The U.S. paid $7.2 million--1.9
cents per acre--for a land rich in oil
and gold, currently valued at $100
billion, according to Matthew
Mondanile of Cushman & Wakefield.
At the time of the sale, famed
journalist Horace Greeley of the New
York Tribune called the purchase both
"inconvenient" and "dangerous" for
the U.S., as the territory offered
"nothing of value but furbearing
animals." Alaska became a U.S. state
in 1959.
Blunderer: Xerox
Blunder: Lifting the kimono
In the early 1970s, Xerox developed
world-changing computer technology,
including the mouse and the
graphical user interface. (Modern
GUIs include Microsoft Windows and
Mac OS X.) One of the devices was
called the Xerox Alto, a desktop
personal computer that Xerox never
bothered to market. (Who would want
something like that?) A decade later,
several Apple employees, including
Steve Jobs, visited the Xerox PARC
research and development facility for
three days in exchange for $1 million
in Apple's still-privately held stock.
That educational field trip was well
worth the price of admission (Apple
stock now worth $3.5 billion), given
that it helped Jobs build a company
now worth $110 billion. In the late
1980s, Xerox sued Apple for using
GUI technology in its Macintosh
Blunderer: Time Warner
Shareholders
Blunder: The merger of AOL and
Time Warner
On Feb. 11, 2000, Internet portal
America Online, then valued at $108
billion, swallowed media stalwart
Time-Warner (worth $111 billion) for
$164 billion in an all-stock deal. AOL
owned 55% of the new, combined
company; Time-Warner, 45%. Then
came the tech wreck of 2001,
followed by the rise of stiff
competitors Yahoo! and Google. As
cultures clashed and the stock price
tanked, the company in 2002
reported a one-time write-off of $99
billion--at the time, the largest
corporate loss ever reported. At its
nadir, the firm boasted a meager
market cap of $48 billion--$171 billion
less than at the time of the merger.
Blunderer: Seattle Computer
Products
Blunder: Sale of the DOS
operating system
Back in 1980, Tim Paterson, a 24-
year-old programmer at Seattle
Computer Products, spent four
months writing the 86-DOS operating
system. Meanwhile, Bill Gates was on
a hunt for operating software that
Microsoft could license to IBM; Big
Blue had the money and factories to
build computers, but not the
operating system to run them. Gates
bought the DOS system for a
pittance: $50,000. When Seattle
Computer figured out what it had let
slip through its fingers, it accused
Microsoft of swindling the company
by not revealing that IBM was its
customer; Microsoft settled by
compensating Seattle Computer an
additional $1 million in 1986. Big
deal--the market for the rest of
Blunderer: Napoleon, On Behalf
Of France
Blunder: The sale of the
Louisiana Territory
In 1803, Napoleon was struggling to
defend all the land France had
acquired in the New World,
specifically Haiti, which was in the
midst of a slave revolt. With his army
stretched thin, and unwilling to
relinquish Haiti, Napoleon offered to
sell the entire territory of Louisiana,
rather than just the port of New
Orleans, as had previously been
discussed. The offer: $15 million--3
cents per acre--or about $284 million
today. The current value of that land
(now including portions of 15 U.S.
states and two Canadian provinces):
around $750 billion, estimates
Matthew Mondanile of Cushman &
Wakefield. And Haiti? Less than a
year after France inked the sale, Haiti
Blunderer: The Canarsees
Blunder: The sale of Manhattan
island
How could they have known? In 1626,
Canarsee natives traded for trinkets a
now rather stylish plot: Manhattan
(then called New Amsterdam). The 23
square miles many New Yorkers
consider "the center of the universe"
is now valued at a cool $1 trillion,
estimates Matthew Mondanile of
global commercial real estate firm
Cushman & Wakefield. In another
short-sighted deal, the Dutch later
traded New Amsterdam to Great
Britain for what is now the Republic of
Suriname, a small country in South
America with a wee gross domestic
product of $2.9 billion.
Size Of Blunder: $1 trillion
Blunderer: The World's Central
Banks
Blunder: Global economic
upheaval
U.S. Federal Reserve Chairman Ben
Bernanke and his counterparts across
the globe have the power to jump-
start or derail entire economies by
cranking the credit spigot open or
closed. Rubert Mundell, winner of the
1999 Nobel Prize in economics, has
argued that "bungled monetary policy
in the 1920s and 1930s caused
chronic deflation [falling prices] and
destabilized the world," writes author
Charles Wheelan in his book Naked
Economics. Mundell's argument: "'Had
the price of gold been raised in the
late 1920s, or, alternatively, had the
major central banks pursued policies
of price stability instead of adhering
to the gold standard, there would
have been no Great Depression, no