Making predictions about the future has for centuries been the craft of astrologers like Nostradamus and fortune-tellers with crystal balls, but today, studying the past, using statistics and projecting future trends has turned the ancient art of divination into futurology and, more specifically for our investing purposes, into corporate foresight.
Corporate foresight enables a company to foresee changes in their business environment in order to adapt in time and ensure long term success; Eastman Kodak (EK) is the poster child for what happens when a company fails to predict or adapt to technological changes in its main field of activity.
The companies listed below sell products or provide services that are likely to become obsolete or less desirable in the next decades.
Gannett Co. (GCI) and The New York Times Co. (NYT) - Traditional newspaper companies have suffered losses both in subscription and advertising revenue due to increased competition from the internet. Gannett has seen its sales constantly declining from $8 Bil. in 2006 to 5.3 Bil in 2011; The New York Times had revenues of 3.4 Bil in 2005 falling to 2.3 Bil in 2011.
Altria Group (MO) - In most advanced economies, public awareness of health risks associated with smoking, increased government regulation and excise taxes have caused a decrease in consumer demand for cigarettes. The FDA aims to reduce the US smoking rate to 12% over a decade from 21% in 2010 and beginning next September all cigarette labels and advertisements will be required to display more prominent health warnings. Altria's net income has declined from $4.9 Bil in 2008 (after the spin-off of Philip Morris) to $3.9 Bil in 2010.
Manpower International (MAN) - It is one of the largest staffing companies in the world. The bad news is that almost 70% of the company's revenue comes from the placement of low skilled labor in the industrial and construction sectors. As early as 1936, Charlie Chaplin with Modern Times proved to have a keen insight on the evolution of the industrial sector, anticipating that all factory workers will eventually be replaced by robots in the future. As for Manpower, being unable to offer specialized workers results in lower fees per placement now and dropping demand in the next two decades.
International Paper Company (IP) - A big slice of the company's income depends on the sale of writing and printing paper. As I've written above there is a decreasing demand for newspapers, and I.P. will be probably facing more icy winds as electronics gradually replace writing paper; paper consumption per person fell by 8% from 2000 to 2010 and the paperless office will sooner or later be a reality in the more advanced and environment friendly economies. While there is growing demand for paper products in emerging markets, I guess that in the 2030s books and magazines will only be published in electronic format and students in schools will jot down their notes on their tablets.
Gamestop (GME) - Although Gamestop operates in the very profitable and growing videogames sector, competition from large retailers and increased marketing of downloadable content directly from game developers and gaming console producers' websites will eventually take away customers from the traditional store chain, which could at last suffer the fate of Blockbuster Inc.