Top 10 Biggest Losers in Fortune 500

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1. American International Group
Fortune 500 rank: 245
Loss: $99.3 billion

AIGNo surprise here: The New York-based insurance company that spawned an out-of-control London derivatives dealership is now a $170 billion (and counting) headache for the American taxpayer. The bulk of the losses came from the hundreds of billions of dollars worth of contracts created by AIG Financial Products to pay off holders of mortgage-backed securities if the home loans that backed them defaulted.

As housing prices collapsed last year, the epicenter of the crisis quickly moved to the London offices of the previously little-known AIGFP. When AIG said in September it couldn’t make good on the huge sums it owed AIGFP counterparties like Goldman Sachs, the U.S. Treasury Department took an 80% stake in the company rather than watch those contracts unravel disastrously.
2. Fannie Mae
Fortune 500 rank: 112
Loss: $58.7 billion

fannie_mae_logoIt wasn’t long ago that business was easy for a quasi-governmental entity with a mandate to expand home ownership. Washington-based Fannie borrowed money at low rates, then used it to buy or guarantee roughly 20 million mortgages. A big lobbying budget meant execs were welcome in just about any congressional office.

But these days, Fannie is more like the government’s punching bag. As the delinquency rate on the single-family home loans it guarantees more than doubled last year, the company was taken over by Treasury, which is now using it to absorb an endless stream of housing market losses. Last year Fannie lost a staggering $30 billion on its mortgage guarantees alone. By now, execs will be lucky to get a congressional Christmas card.
3. Freddie Mac
Fortune 500 rank: 220
Loss: $50.1 billion

freddie_mac_logo_newBeing the smaller “toxic twin” didn’t protect Freddie Mac from the mortgage-market carnage. In fact, Freddie gave its bigger sibling a run for its money when it came to 2008 losses.

Though Fannie and Freddie aren’t allowed to guarantee subprime mortgages, Freddie bought some securities backed by the low-quality loans for its own portfolio - and paid the price. It reported $16 billion in realized and unrealized losses on a $75 billion subprime portfolio in 2008, as delinquencies hit an eye-popping 38%.

Losses like those forced Freddie to get $14 billion in new capital from Uncle Sam in 2008, while big sister Fannie didn’t need new money until this year. And the federal funds - Freddie has since asked for $31 billion more - come with a hefty price tag: a 10% annual dividend rate that will weigh on Freddie’s profits even when good times return.
4. General Motors

Fortune 500 rank: 6
Loss: $30.9 billion

General MotorsGM has been skidding for years, but the wheels fell off last year. The biggest U.S. carmaker lost $21 billion on its operations in 2008, as its global vehicle sales plunged 11%. Further losses piled up from the falling value of its stake in troubled lender GMAC and costs tied to closing factories and laying off workers.

With $13.4 billion in government loans, GM is again trying to revive its fortunes. Highlights of the latest turnaround plan include the launch of nearly two dozen fuel-efficient or crossover vehicles in coming years and deeper cutbacks in models and labor costs. With the company, the government, and investors now haggling over the terms of a big debt restructuring, the next month could go a long way to determining GM’s shape in the future.
5. Citigroup
Fortune 500 rank: 12
Loss: $27.7 billion


citigroup_jcThe unwieldy banking supermarket built by Sandy Weill finally came undone, losing money in every quarter of 2008. The headliner was a $14 billion loss in subprime mortgages, but the bank also took a $10 billion writedown on the value of companies it acquired during its long corporate shopping spree. CEO Vikram Pandit has begun the process of divorcing Citi’s bank and brokerage businesses by placing Smith Barney in a joint venture with Morgan Stanley.

In February 2009, the government took took up to a 36%stake in exchange for its third capital infusion and a big asset guarantee. And in April, Citi surprised Wall Street with its first quarterly profit in more than a year, helped by strength within its investment banking division.

6. Merrill Lynch

Fortune 500 rank: 150
Loss: $27.6 billion

merrill_lynch

The big brokerage house survived 2008, but just barely, with the help of a last-second sale to Bank of America - and, of course, copious amounts of taxpayer funding. CEO John Thain spent the bulk of the year trying to shed bad bets from the Stan O’Neal days.

After Bear Stearns imploded in March and as Lehman Brothers was failing in September, Thain saw the writing on the wall and arranged a sale to BofA. But not satisfied with being the savior of Merrill’s thundering herd of brokers, Thain demanded a fat bonus - and promptly got himself bounced by his new boss, BofA’s Ken Lewis.

The news got even worse, with taxpayers forced to lend BofA billions of dollars to fill a hole created by some $30 billion in Merrill writedowns. Oh, and it turned out Thain spent $35,000 on an office toilet. Some hero.

7. ConocoPhillips
Fortune 500 rank: 4
Loss: $17 billion

conocophillipsHow did America’s No. 3 oil company manage to lose money in a year that saw the price of crude oil soar to its all-time high? Let’s say Conoco, like so many of its peers, was forced to face the fact that it had overpaid on the acquisition trail.

In the fourth quarter, Conoco took a $35 billion writedown of its oil and natural gas producing properties, largely reflecting the second-half plunge in commodity prices - and the hefty premiums the company paid in the 2002 merger of Conoco and Phillips and the 2006 acquisition of Burlington Resources. By contrast, ExxonMobil, the biggest oiler and a recent holdout in the merger game, spent 2008 churning out the biggest-ever profit in Fortune 500 history. No wonder Conoco shareholder Warren Buffett recently termed his decision to purchase the stock at the peak of the oil bubble “a major mistake.”
8. Ford Motor
Fortune 500 rank: 7
Loss: $14.7 billion


fordFord emerged in 2008 as the healthiest patient in the ICU. Unlike domestic rivals GM and Chrysler, it didn’t take federal bailout funds, thanks in part to cash it got from the sales of Jaguar and Land Rover and a big raft of loans it took out just after CEO Alan Mulally took over. What’s more, Ford has already reached an agreement with the United Auto Workers union on a more competitive pay plan.

Yet the company still lost nearly $12 billion from operations in 2008, as sales tumbled and prices slumped. And unlike GM and Chrysler, which are separate from their financing arms, Ford still owns its finance unit - which left it holding $2.6 billion on bad loans to car buyers. Still, Ford actually gained a sliver of market share from GM and Chrysler last year, and its new hybrid - the Fusion, which gearheads are calling the best gas-electric car yet - may make Mulally the only Big Three chief to keep his job.
9. Time Warner
Fortune 500 rank: 48
Loss: $13.4 billion


time_warner1Time Warner finally acknowledged what the market has long been telling it: The media business has changed forever, and not for the better. Time Warner wrote down the value of its cable, publishing and AOL divisions to the tune of $25 billion. The biggest writedown was for cable, where Time Warner had been significantly overvaluing its franchise rights in an era when cable systems compete with each other, satellites, the Web, and even cell phones for viewers. AOL and publishing arm Time Inc. (which owns Fortune) took hits thanks to a diminishing advertising market and again, more competition from new media sources.

Businesses like movies and TV did fairly well, with hits like “The Dark Knight” in the theaters and “Two and a Half Men” on the small screen. But with its spinoff of Time Warner Cable complete, Time Warner took a step a rich media company might once have deemed unthinkable: a reverse stock split, for the sake of rescuing the shares from the depths of their single-digit despair.
10. CBS
Fortune 500 rank: 186
Loss: $11.7 billion


cbs_logo2Though the Tiffany network may be No. 1 in the ratings these days, its parent was far from immune to the wasting disease ravaging media stocks. Despite buying online tech news site CNET.com, CBS saw a significant decline in the value of its businesses, especially its ownership of local CBS-affiliate TV stations. It took a $10 billion loss on the value of those stations thanks to another year of double-digit declines in advertising revenue.

Profits in the publishing division fell too, as the company failed to produce a hit as big as last year’s “The Secret” from Simon & Schuster. Radio also saw operating income fall by a third as CBS sold off stations in non-core markets like Denver and Seattle.

The biggest loser of all might be Sumner Redstone, whose family company still owns a controlling interest in CBS - a mixed blessing in a year when quarterly dividends got slashed 81%.

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Chrysler was also filed for bankruptcy...