Companies locked in a struggle to remain viable and maintain their profits and sales sometimes begin to run out of customers. This happened to GM (NYSE: GM), which had a 50% share of domestic car sales in the mid 1960s. GM’s portion of the American market is 20% today. Most of the business GM lost went to large Japanese manufacturers Toyota Motor (NYSE: TM), Honda (NYSE: HMC) and Nissan. The effects of GM’s failure where the loss of hundreds of thousands of jobs and an eventual Chapter 11 filings.

Sears (NASDAQ: SHLD) used to be a dominant retailer. So did JC Penney (NYSE: JCP).  These wound up losing market share because of competition from Wal-Mart and a number of specialty stores such as Abercrombie & Fitch (NYSE: ANF).  This is nothing new. Microsoft (NASDAQ: MSFT) was the only broadly available PC operating systems for years. Yahoo! (NASDAQ: YHOO) was the No. 1 search engine until it was replaced by Google. Dell’s (NASDAQ: DELL) leading spot in the PC industry was eroded by Hewlett-Packard (NYSE: HPQ) which bought Compaq, and several Asian firms led by Lenovo and Acer.

One reason why companies lose customers is a lack of innovation. The Post Office did not move into the fax business. It did not offer e-mail addresses like AOL (NYSE:AOL) did. In other cases,  large companies loosened their grip over the marketplace over time. Ninety-year old Kleenex had more than half the market share in tissues for decades. Store brands have pushed the market share of Kleenex down to 46% although it is still a highly profitable brand for parent Kimberly Clark.

Another reason that companies lose customers is that new competition often offers lower prices for similar products or services. American steel firms dominated the industry from the late 19th century until four decades ago. Japanese manufacturers began to offer cheaper products. More recently, steel production in China has increased sharply. The largest steel company in the world is India-based AcelorMittal which operates in more than 60 countries

Buggy whip companies could have been the first car makers, and newspapers could have been the first firms to put large amounts of news online. Neither happened. One new set of businesses were born. Older ones lost customers and some lost enough so that they were no longer viable.

This is the list of the Ten Companies Running Out Of American Customers.

1. Best Buy

December same-store sales for the consumer electronics company fell 4%.  For the same period, sales at Best Buy stores open for at least 14 months declined 5% in the United States as competing retailers offered deeper discounts.  Profits for Best Buy (NYSE: BBY) decreased 4.4% in the third quarter compared to last year.  The company risks further loss in market share as more consumers turn to mass merchants and online shopping for their electronics needs. Best Buy offered a weak forecast for the quarter ahead when it announced earnings. The firm’s stock fell from $42 to $34 the day of the disclosure. Best Buy will specifically face greater future competition with like Wal-Mart (NYSE: WMT) Amazon.com (NASDAQ: AMZN)

2. Nintendo

The Wii was a surprise victory for the video game company. The console outsold the Microsoft (NASDAQ: MSFT) Xbox and Sony (NYSE: SNE) PS3 worldwide for most of 2007, 2008 and 2009.  More than 86 million Wiis were sold from 2006 to 2010. But as the novelty of the system wore off and with no replacement on the horizon, Nintendo has stopped winning new customers. The company is threatened by Sony’s “Move” device for the PlayStation 3 and Microsoft’s “Kinect” for the Xbox. Nintendo recently cut its sales forecast for the Wii from 17.5 milion to 16 million for the year. It also reduced sales forecasts for its handheld platform, the DS, by 1 million units.

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3. US Postal Service

The United States Postal Service continues to lose customers to its more efficient competitors.  The number of pieces of mail handled by the USPS  decreased from 201 billion in 2008 to 169 billion in 2010.  The number of processing facilities operated by the agency fell from 599 in 2009 to 528 in 2010.  The Post Office has been hurt by competition from UPS (NYSE: UPS), Fedex (NYSE: FDX), the fax machine  and e-mail and online data transfer.  People are even able to take notes on their smartphones that they used to write on paper.

4. TiVo

TiVo was once the only standalone digital video recording product. But for more than five years, cable companies have offered the same service without the need to buy a special device. At the end of October 2008, TiVo had a subscriber base of 3.45 million customers. That number dropped to 2.7 million in 2009 and 2.27 million last year, amounting to a 2-year decrease of 34%. Instant streaming available from Netflix (NASDAQ: NFLX) has also cut into TiVo’s customer base significantly. TiVo’s answer to its dilemma has been to file patent suits against Echostar (NASDAQ: SATS), AT&T (NYSE: T) and Verizon (NYSE: VZ). The IP door swings both ways. Microsoft recently sued TiVo for allegedly infringing on four patents. Ten years ago, when TiVo dominated the market, its shares traded for $50. The price is now under $10

5. Merck

The greatest cause of Merck’s (NYSE: MRK) costumer loss is that the pharma company’s drug patents are expiring.  In April 2010, the company’s treatments for high blood pressure and heart disease, Cozaar and Hyzaar, lost patent protection in the United States.  The sales of the drugs decreased from $861 million in the quarter ending September 30, 2009, to $423 million for the same period in 2010. Now that the drugs are no longer patent protected, generic manufacturers are taking  more Merck’s customers.

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6. AT&T

In general, AT&T is doing very well.  Consolidated revenues increased 2.1% in the fourth quarter from the same period a year earlier. Wireless net subscription adds increased by more than 2.8 million.  But, the company cannot avoid the fact that people are getting rid of their home phones. Income from wireline voice services has dropped a full 12.8% in the three months ended Dec. 31, 2010, compared to that period one year earlier. Home phone customers have increasingly turned to VoIP and cellphones to take the place of the wireline phone that nearly every house in America had for nearly a century

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7. USA Today

For years, USA Today was neck and neck with The Wall Street Journal for the lead in daily circulation among US papers. USA Today even held a comfortable lead over the Journal three years ago. But several bad years have pushed USA Today well into second place. For a six month period ending September 28th, 2009, the paper’s daily circulation was 2.3 million. For the same period in 2010, circulation was 1.8 million, a decrease of 21%. USA Today has suffered the same fate that most large dailies have as more people get their news online.

Also Read: “Low” U.S. Inflation is the Result of Clever Calculation

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8. Wal-Mart

Wal-Mart (NYSE: WMT) may finally be running out of room for U.S. expansion.  Sales at U.S. stores open for at least a year fell 1.3% in the third quarter.  This was the sixth consecutive quarterly decline.   Only 54 new Wal-Mart stores opened in the U.S in 2010., down from 112 in 2009 and 159 in 2007.  The company’s Sam’s Club business also lacks enough customers.  In 2007, 12 stores opened and in 2009 11 stores opened, with no closings either year.  But, in 2010, six Sam’s were opened and 12 were shut. Wal-Mart has such a substantial market share in the US that it has become progressively harder to grow. Smaller companies such as Target (NYSE: TGT) and Amazon.com are now a threat to the world’s largest retailer.

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9. Nokia

Nokia (NYSE: NOK), the world’s largest  handset maker by unit volume, continues to struggle to maintain customers in the U.S. According to research company comScore, Nokia had only 7.2% of the U.S. market for mobile subscribers as of November 2010, less than Samsung, LG, Motorola (NYSE: MOT), and RIM (NASDAQ: RIMM).  This percentage is down 2.4% from September 2009’s market share of 9.6%.  The firm’s problems have caused Nokia’s stock to drop  75% since it peak value in the fall of 2007.  The huge success of the Apple (NASDAQ: AAPL) iPhone and smartphones using the Google (NASDAQ: GOOG) Android operating system has set the bar very high for phone manufacturers. Nokia has been unable to rise to the occasion as its operating system, Symbian, has also lost ground.

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10. Dish Network

Recently, Dish (NASDAQ: DISH) earnings have increased. But, this is due to a higher monthly subscriber-generated revenue, not more customers.  The company has actually begun to lose more customers than it is adding.  For the quarter ended September 30, 2010, DISH had a net loss of about 29,000 customers.  This compares with a net gain of about 241,000 customers a year earlier.  Many of Dish’s subscribers are facing difficult times financially, leading them to cancel their satellite services. DISH is also losing business to cable TV and telecom company fiber to the home video products.

Charles Stockdale and Douglas A. McIntyre

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