10 biggest market losers of 2011

COMMENTARY To err is human, but to destroy $300 billion in shareholder value, it helps if you're a CEO. Sure, they're human too, but when your 401(k) crashes and burns overnight, it's hard to have sympathy for the guy who was behind the wheel.

2011 was definitely a year of CEOs driving their once-iconic companies off a cliff. Some of the crashes were so spectacular, you'd think they planned it that way, sort of like a stunt crash you'd see in a movie. Except, as we discussed in "Blackberry -- how RIM destroyed a great brand," the results have been all too real.

In fact, 2011's biggest market losers somehow managed to destroy more than $300 billion of market capitalization this year alone. And who says CEOs aren't overachievers?

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What I find particularly interesting -- and not in a good way -- is that, once upon a time, nearly all these companies were leaders in their respective markets. What can all business leaders learn from that? In a hypercompetitive global market like we have today, you can't afford to sit on your laurels, not even for a year.

These days, executives need to be more fluid in their planning and more nimble in their execution than ever before. That means continuously challenging the status quo, evaluating the competitive landscape, and reacting quickly enough to give the perception of being proactive.

These days, innovation isn't usually about being first. It's about being the best and staying that way. Otherwise, you can end up like these 10 losers. Although some companies shed more in terms of share price and market cap, I chose these 10 because, in my opinion, they more or less did it to themselves. As such, they represent cautionary tales and critical lessons for every executive and business leader.

1. Kodak (EK)

CEO Antonio Perez may have brought Kodak into the digital age, but he didn't do it effectively, that's for sure. During his eight-year tenure, revenues have plummeted, the company has bled billions in red ink and its share price has declined by 97 percent. Perez failed to cut costs and turn around this relic of a company. Now, its only chance to avoid bankruptcy appears to be to find a way to monetize its considerable patent portfolio. Good luck with that. The stock is down 88 percent so far this year.

2. Research In Motion (RIMM)

Three-and-a-half years ago, RIM was on top of the world. You couldn't sit in a boardroom without four or five people checking their BlackBerry smartphones. Revenues and profits had doubled year-over-year. Since then, co-CEOs Jim Balsillie and Mike Lazaridis couldn't have done a better job of self-destructing if they'd planned itthat way. Since Apple introduced the iPhone and Google launched the Android platform, it's been all downhill for RIM's hapless duo. When the iPad caught them completely by surprise, you'd think there'd be a leadership change. But nope, that's not going to happen at the Canadian company. Meanwhile, shares of RIM have been in a freefall, plummeting 92 percent since its heyday, and 83 percent year-to-date.

3. First Solar (FSLR)

It's hard to believe, but Forbes named First Solar America's fastest growing tech company less than a year ago. That's when the sun started to set on America's biggest solar panel maker. Indeed, the entire industry is reeling from weak demand, a glut of low-cost panels from China, and swirling controversy over ill-conceived government loans to green-tech companies that have cost taxpayers billions. After running the company for just two years, the board fired CEO Rob Gillette, citing the need for "leadership change to navigate through the industry turmoil," according to chairman and founder Michael Ahearn, who's currently serving as interim CEO. Shares of First Solar are down a whopping 83 percent from their 52-week high.

4. Netflix (NFLX)

The day after the Fourth of July, shares of Netflix closed at $295.14. Less than five months later, the stock was trading in the low $60s. Hard to believe. What caused the precipitous drop was a change in Netflix's pricing structure meant to more or less separate the company's legacy DVD rental business from its growing streaming video service. CEO Reed Hastings maintains that the pricing strategy is solid -- it's the way he implemented and communicated it that was flawed. Maybe, but the company has lost nearly a million subscribers and the stock is still down 78 percent from its 52 week high.

5. Alcatel Lucent (ALU)

When Alcatel and Lucent merged in 2006, it was hoped that the complementary businesses of these two iconic companies would outweigh their huge cultural differences. To say that didn't happen is putting it mildly. The marriage of French Alcatel with American Lucent has been a train wreck since day one. After billions in losses and writedowns, the board dumped CEO Pat Russo in 2008 and restructured around former British Telecom CEO Ben Verwaayen. That was a good move, but profitability remains elusive and investors are tired and angry. The stock is trading near all-time lows, down 79 percent year-to-date. Personally, I think a divorce is in order, but that's just me.

6. Bank of America (BAC)

To say that Bank of America's acquisitions of Countrywide Financial and Merrill Lynch were bad ideas is like saying the collapse of Enron and WorldCom were unfortunate mistakes. Former CEO Ken Lewis may very well have made some of the worst decisions in corporate history. Since then, it's been one controversial mess after another: TARP, outrageous executive bonuses, WikiLeaks, layoffs, lawsuits over mortgage-backed securities, and questionable practices surrounding foreclosures, credit card interest rates and lending practices. The stock is down 67 percent year-to-date, but the destruction of market and brand value for one of America's largest companies is incalculable.

7. Sprint Nextel (S)

CEO Dan Hesse may have inherited a post-megamerger mess, but he was supposed to fix it, not prolong it. Since he took the reins four years ago, Sprint has lost about $9 billion and shareholders have lost 83 percent of their investment. Hesse recently bet the company by committing to buy over 30 million iPhones over the next four years, whether they sell or not. That roll of the dice may very well pay off, but if it doesn't, it'll likely be the final nail in Hesse's coffin, so to speak. Which is a shame, since I know you must love him starring in those dumb ads as much as I do. Maybe he'd have better luck as an actor. In the mean time, shares of Sprint are down 67 percent this year.

8. Sony (SNE)

Sony's problems didn't start with CEO Howard Stringer, but on his watch, the company has lost $4.5 billion over the past three years and continued its long, slow decline into consumer electronics mediocrity. After six-and-a-half years running the show, you'd think the excuses of having to contend with an overblown Japanese bureaucracy would get old, but apparently not. As I wrote when Stringer got the job back in 2005, "There is no evidence that Stringer has the background or the capability to engineer a turnaround." That's my story and I'm sticking to it. In the meantime, shares of Sony are trading near 18-year lows, down 55 percent year-to-date.

9. Nokia (NOK)

Under former CEO Olli-Pekka Kallasvuo, the once-dominant cellphone maker more or less missed the smartphone transition. Now Nokia's consistently losing market share to Apple's iPhone and Google's Android in the high-growth and high-margin segments of the wireless market. The result of Nokia's staggering lack of vision and strategic planning is shrinking revenues and plunging profits. The stock is trading near a 14-year low, down 62 percent year-to-date. Current chief Stephen Elop is trying to clean up the mess by partnering with Microsoft (MSFT) and moving to Windows Phone 7, perhaps his only option, albeit not a great one.

10. Hewlett-Packard (HPQ)

Last year, HP's board fired CEO Mark Hurd over a sex scandal that never happened. Never mind that he'd just executed one of the most successful turnarounds in history. Then it replaced Hurd with Leo Apotheker, who had recently been fired by SAP (SAP) for nearly destroying the German software giant. Since then, it's been one bad move after another: a high-profile about-face on the much-anticipated TouchPad and WebOS; stupidly telegraphing his intent to sell the company's $41 billion PC group a year in advance; and generally trying to convert HP into a second-rate software company. HP's hapless board finally fired Apotheker. Unfortunately, it replaced him with Meg Whitman, the former eBay (EBAY) CEO, who has no experience with IT companies or turnarounds. So be it. The stock is down 49 percent in 2011.

So, how can companies avoid becoming train wrecks like these?

Well, I think one of the reasons why CEOs aren't more proactive and aggressive in turnarounds is because, for the most part, their compensation packages reward the status quo. In other words, they get paid big bucks whether they fail or not. And while some do take risks, they seem to be more of the grandiose type, like ultra-high-risk megamergers that are more or less doomed to fail.

And boards of directors, the people whose job it is to oversee CEOs -- to hire, compensate, and fire them -- are mostly former executives who essentially rubberstamp everything put in front of them. In terms of checks and balances, it really doesn't get any more dysfunctional than that, now does it?

But then you probably already knew all that. Will it ever change? Probably, but don't hold your breath. Until then, just keep saying the magic word to your broker over and over again: diversify, diversify, diversify.