It’s time for my 2012 list of some of the biggest business winners and losers with Houston ties.
R. Allen Stanford: Convicted of running one of the biggest Ponzi schemes in history and swindling almost 30,000 investors out of $7.2 billion, Stanford was sentenced to 110 years in prison. After years of living lavishly on a Caribbean island with investors’ stolen money, the former Sir Allen is now simply known as inmate 35017-183.
Chesapeake Energy: Once the darling of the hydraulic fracturing boom, the Oklahoma City-based company was waylaid by slumping natural gas prices. Big write-downs have hammered the stock, as have revelations about questionable accounting and side deals for its CEO, Aubrey McClendon, who was stripped of his chairman’s title this summer. The company has been selling assets to help pay down its almost $16 billion in debt.
BP: The company has yet to shake loose of the Deepwater Horizon disaster in 2010. It took a big step toward resolving the civil litigation from the accident, reaching a tentative $7.8 billion settlement with Gulf Coast business owners and other civil claimants. But it came at a price. BP agreed to plead guilty to 14 criminal charges and admitted to causing the deaths of 11 men on the rig. Just weeks after that deal was reached, the U.S. Environmental Protection Agency temporarily suspended the company from bidding on new federal contracts, which include new oil and gas leases.
Dr Pepper drinkers: The Plano-based soft drink maker angered customers statewide, including many Houstonians, when it forced a bottling plant in Dublin to stop making an iconic version of the drink with cane sugar instead of corn syrup. For years, Dublin Dr Pepper’s cult following was encouraged by the corporate office, but a change of ownership resulted in a lawsuit that was settled earlier this year. The family-owned Dublin bottling plant, which has been in operation since 1891, soldiers on, making a new line of its own drinks, but alas, Dublin Dr Pepper is no more.
Hewlett-Packard: The computer maker rounds out the loser list for the third year in a row. Last year, it was represented by Leo Apotheker, who was ousted as CEO after just 11 months. This year, it’s Apotheker’s biggest deal, the purchase of British software maker Automony, that earns HP a spot. HP now claims it found accounting improprieties at Autonomy and plans an $8.8 billion write-down, wiping out much of the acquisition’s value. Meanwhile, Apotheker’s replacement, Meg Whitman, urged investors to have patience in outlining a five-year turnaround plan, an eternity for a tech company that’s a major Houston employer.
Landlords: Rents in the Houston area are at an all-time high and likely to keep rising. Average rents grew more than 5 percent this year, to $785 in September, compared with a typical growth rate of less than 3 percent. Demand shows little sign of slowing, new construction hasn’t kept pace, and employers continue to add jobs. Compounding the apartment shortage: Many people are finding it more difficult to qualify for mortgages as lenders tighten restrictions on home loans in the wake of the financial crisis.
Oil companies: Domestic oil production surged to its highest level in 15 years, as the hydraulic fracturing boom tapped new reserves. The International Energy Agency even speculated U.S. production could top Saudi Arabia’s by 2020. Despite the increased production, oil prices remained high enough that oil companies were able to report another profitable year while still funding more expensive drilling operations. Their companies’ success helped spawn another winner: the Houston economy. The Brookings Institution ranked it the fastest-growing in North America.
United Airlines: It reached a four-year contract with its pilots, a crucial step in completing its merger with Continental Airlines. The deal gives the combined pilots more money and bigger retirement contributions. United still has a lot of hurdles. It lost more than $100 million in the first three quarters of the year, and it remains in the basement of the government’s customer service ranking, but getting the pilots on board was a big win.
Janitors: After weeks of striking and demonstrating, about 400 janitors who clean some of the city’s biggest office buildings won a contract that will gradually increase pay to $9.35 an hour from $8.35 over four years.
TPC shareholders: Directors of Houston-based TPC Group were quick to accept a $40-a-share offer to take the company private, but investors protested, saying they wanted the country’s biggest maker of butadiene to solicit competing bids. Butadiene is used to make rubber for tires and other products. A bidding war ensured, and shareholders approved a $45-a-share offer earlier this month, adding almost $78 million to the deal’s value.