Smaller & Smaller: H&R Block Is Among America’s Fastest Shrinking Companies
The corporate world is shrinking. And while some mega firms are merging with other large firms, some of the S&P 500-listed companies are shrinking, and shrinking fast.
Some are shrinking because their industries are suffering or becoming obsolete. But there is also the trend of breaking up companies into smaller, separately run units. But a shrinking company isn’t always a bad thing. “A shrinking business may, in fact, often serve as a blessing in disguise to shareholders,” reports 24/7 Wall St.
24/7 Wall St.’s reviewed the state of S&P 500 companies recently and found America’s 10 fastest shrinking companies.
No. 1 on the list was Altria Group Inc., which has seen a -71 percent 10-year change in revenue. Last year they earned $17.7 billion. In 2002, Altria sold much of its stake in the Miller Brewing Company, which is now part of SABMiller. Altria still holds a 26.8 percent stake in SABMiller but it does not count sales of beer as part of its revenue. In 2007, Altria spun off Kraft Foods, and in 2008 it spun off its international cigarette operations into a separate publicly traded company, Philip Morris International.
In second place was Tyco International Ltd. With revenues last year of $10.6 billion, the company has experienced a 10-year change in revenue of -69 percent. The early 2000s marked a period of scandal for the company as its CEO Dennis Kozlowski and CFO Mark Swartz were convicted in 2005 for embezzling money from the company. In 2007, it spun off its healthcare and electronics businesses into two new companies, Covidien and Tyco Electronics — renamed TE Connectivity; in 2011, the company spun off its ADT home security and its valve making businesses. Today, Tyco sells security and fire safety products and services.
Motorola Solutions, Inc. was in third place for the fastest shrinking companies. Its 10-year change in revenue was -62 percent and its revenue was $8.7 billion. The company saw a major sales drop in 2011 when it halved its operations. More shrinking is on the way as in April, the company said it would sell its enterprise solutions business, worth about $2.7 billion.
H&R Block with revenues of $3 billion saw revenues decrease because it stopped offering several unprofitable lines of business. In 2006, H&R Block got out of the mortgage business and in 2008 it sold its mortgage servicing operations. Also in 2008, H&R Block sold its financial advisory business. Finally, in fiscal 2012, the company sold its accounting services and investment banking operations.
There’s more: H&R Block just agreed to sell its banking unit, HRB Bank.