Sometimes you have to wonder how some companies ever made it. A good example is Fannie Mae and Freddy Mac. The US government guarantees these two companies solvency at the tax payer’s expense to the tune of $200 billion dollars. So, in this deal both the tax payer and the stock owners lose. In addition to that, we have the “wing nut” banks that have mortgaged millions of homes to borrowers who couldn’t afford the mortgage in the first place.
Another fine example of “what were they thinking” is Charter Communications. This company needs a serious shake-up. Charter Communications is headed towards bankruptcy. They will file chapter 11 in due time.
Charter’s current debt load is twenty-two billion dollars and less than one billion in revenue. You would think the United States Congress was managing Charter Communications with the amount of debt it carries. The ironic part for Charter is Paul Allen is the CEO and owns 28,531,77 shares as of April 2008. Paul Allen was the cofounder of Microsoft.
Charter is headquartered in St. Louis, MO and grew from a regional cable company into the third largest cable company in the U.S. The growth represents much of the debt for the purchase of other smaller cable companies. Unfortunately, due to the bad judgment of investment the company is headed to the collectors.
The saddest part of this story is the loser. The losers are the current shareholders of the stock CHTR. After an entity files for bankruptcy the shareholders are always last in line for recovery of any (if any) cash. Charter was recently delisted from Nasdaq. Nasdaq delists stock that falls below the value of one dollar.
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