Name changes bring share falls

By TREVOR WEBSTER
Updated:

 

IF YOU think recession, 11 September and a two-year bear market has killed the fashion for companies changing their names, think again. This is one kind of expense and upheaval they seem eager to indulge in whatever the economic climate. Despite the confusion it sows in the minds of shareholders, customers and staff - and the damage it usually does to the share price.

Nearly 3,900 firms in 50 countries played the name game in 2000 and the number slipped only 7% to 3,600 last year, despite a 50% drop in mergers and takeovers, which are the biggest single force behind name changes.

The figures come from Enterprise IG, the world's biggest brand-name and identity consultants. It said: 'Name changes not directly attributable to a corporate consolidation, or separation, rose appreciably from 1,456 to 1,681.'

The good news from Enterprise IG is that the dotcom logos and wacky names dreamed up during the internet boom of the late 1990s are being ditched in favour of more familiar names. The bad news is that mysterious initials are still popular and the new trend is towards Latin, Greek or Sanskrit names, or hybrids that sound neoclassical.

BT was prominent in the initials game last year, floating off its Cellnet mobile phone arm under the astonishing moniker of mmO2. It must be a leading contender for the worst name change ever and is so confusing that three different newspapers spell it four different ways.

Bass played safe by switching to Six Continents and Airtours announced a modest change to MyTravel. But the weird names predominated. Insurance giant Zurich Re and Schroder Ventures took the Latin route (or root) with Converium and Permira ('very surprising'). The Post Office opted for Consignia, Peptide Pharmaceuticals for Acambis and Caradon switched to Novar.

Tobacco giant Philip Morris plans to follow with Altria, from the Latin altus ('high'). Computer services firm ITG has been reborn as Alphira from 'alpha', the first letter of the Greek alphabet, and FI Group as Xansa, from the Sanskrit meaning 'put together'.

Why so many weird names? Enterprise IG's Simon Williams said that availability of names is a serious problem. Most international companies will seek trademark registration globally and 98% of real names are already spoken for.

It is clear that the fetish for name changes that started more than a decade ago with the likes of Zeneca, BOC and BTR is still spreading fast. It is already a £1bn business with rebranding costing British companies around £100m a year.

It means good business for brand advisers but a good deal of confusion for the rest of us and a definite risk for a company's share price because three out of four companies suffer on the stock market following a name change. Marconi, Invensys, Corus and Thus were all odd name changes that preceded catastrophic falls in share prices, while mmO2 has hardly distinguished itself so far. Alphira and Novar have suffered sharp falls in the year since they changed identity.

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