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Corporate Darwinism: Only the strong survive
 | Video |
 | Desperate retailers slash prices Dec. 29: After a slow holiday shopping season, many stores are fighting to stay in business by cutting prices in an attempt to get shoppers through the doors. CNBC’s Margaret Brennan reports. Today show |
| Video |
 | Holiday retail sales down Dec. 28: Preliminary holiday retail sales show a slight drop of 2-4%. Michele Gersberg with Reuters News talks with MSNBC's Alex Witt about the details. MSNBC |
Another winner is McDonald's Corp. The fast food company's sales rose nearly 8 percent in November. The chain added healthy items to its menu and improved its food before the recession. It also expanded its hours to sell more early morning breakfasts and late-night burgers.
If their sales stay up, both companies should have plenty of cash to spend on new stores or new products when the recession is over.
Stable banks
Wells Fargo & Co. could leave the recession as the nation's dominant bank, but its path through the next few years won't be painless.
It could still face hefty writedowns on mortgage securities it holds. Its customers' credit card balances increased by 26 percent in the most recent quarter — which could leave it holding stacks of unpaid credit card bills if job losses continue.
Still, Wells' planned deal to buy Wachovia Corp. for about $13.1 billion would add 3,300 branches in 21 states, extending the company's business east of the Mississippi for the first time. And the potential minefields in its financial statements are nothing compared to what its competitors face.
A bank that's even more old-school than Wells is Hudson City Bancorp Inc, a Standard & Poor's 500 company that that few people outside its New Jersey base have heard of. It made no subprime or Alt-A loans during the go-go years. It doesn't resell its loans — it holds them. And it saw deposits increase 3 percent in the most recent quarter.
If this continues, Hudson City will leave the downturn with an even broader deposit base it can use to make a greater number of good-quality loans.
Goliaths
Delta Air Lines Inc. became the largest airline in the world when it merged with Northwest in October. The company says it will make a profit next year, thanks to capacity cuts, lower fuel costs and new fees it charges customers.
Fewer seats across the industry mean airlines have more power to raise prices. If fuel costs stay low, that should make Delta, as the largest player, the best positioned to cash in on higher demand when the downturn ends.
Likewise, Google Inc. remains the champion search engine. Even though it is trimming costs, offering its employees two entrees at its daily free meals instead of three, the company is in a great position to snap up the most talented engineers at a time when some tech companies are cutting jobs.
It also has a mountain of cash — $8.4 billion at the end of the last quarter. With many venture capital firms depleted and the market for initial public offerings comatose, that means it can buy promising companies or technologies with little competition.
Similarly, AT&T Inc. and Verizon Communications Inc. are the top wireless carriers at a time when tough creditors favor the largest players with the most cash coming in. That likely means fewer startups and small companies to contend with, cementing their lead.
Tech kings
New gear and software is way to improve productivity. As a result, business' technology spending may be postponed, but it won't be canceled.
Adobe Systems Inc.'s latest Creative Suite software is a "must have" for companies, even if it's not "must have now," wrote Kaufman Brothers analyst Barbara Coffey.
Cisco Systems Inc. has said it will invest through the recession, bragging that it came of previous downturns stronger. Its competitors are sickly and, like Google, it has a pile of cash.
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