What’s in a name? If it’s a company name, the answer could be lots of zeroes.
Megamerger mania continues in the telecommunications industry, and with these somewhat odd marriages comes the difficult task of naming the offspring.
It doesn’t help that Wall Street has given the cold shoulder to many in the telecommunications sector recently. Behemoths AT&T, WorldCom, and Sprint have all watched their market projections and their net worth melt. These giants are trying to reinvent themselves by spinning off units like long-distance and wireless services in order to focus on the big-buck business services. In the meantime, newly formed companies in the telecom space try to come up with a sing-song name that will grab the attention of the customer and convince the market they’re a force to be reckoned with in the new and changing economy.
According to Enterprise IG, a brand and identity consulting firm, the act of renaming is on the upswing. The number of U.S. corporations changing their names in 1999 exceeded the practice of name changing in 1998 by 42%. There were some 2,700 recorded name changes for corporations in the U.S. during 1999. And the title change rage is apparently a worldwide phenomenon. In the first quarter of 2000, there have already been 1,854 corporate name changes globally, Enterprise reports.
Mergers and acquisitions are a big reason to undergo a name change, but some companies—almost 40% of 2000’s total to date—took the new identity plunge "without the stimulus of a merger, acquisition, or other corporate combination," Enterprise states.
Name changes seem especially notable in the telecommunications industry, which is undergoing significant consolidation. The fact these telecom companies have been around for so long and have had such dull names identified with their images makes their name changes all the more jarring. Take Bell Atlantic, which had swallowed up Nynex years before. In April 2000, Bell Atlantic Mobile merged with Airtouch Communications and PrimeCo. Then in July, Bell Atlantic merged with GTE Corp. That meant getting rid of several well-known company names and possibly confusing millions of customers. The venture was eventually christened Verizon, which the company said derived its name from the Latin word "verity," meaning truth. The process was not only time-consuming—finding the name took an estimated three months—it was expensive. Some consultants guesstimated the search for a dynamic appellation can cost the company millions of dollars (James Earl Jones, eat your heart out). So I obviously made no friends with their press relations folks when I pronounced the new name—now, think of verity—as veri-zon, instead of ver-i-zon (rhymes with horizon). But my diction faux pas was not alone. Reporters, radio hosts, and analysts mispronounced Verizon while late night talk show hosts got some belly laughs out of the new name choice for what would become the biggest telecom company in the U.S.
Naming and branding consultants estimate the cost for a big company to change its name—in addition to a lot of memos, email, hours, and months—is usually just shy of one million dollars.
Which leads me to the next observation about name changing: it’s not an easy task to get it right. The challenge lies in that a good company name takes more than just suits brainstorming in a conference room over pots of stale coffee. Lawyers have to sign off. Web site domain names have to be available. There’s copyrights. (In the U.S., new applications for trademark registration have increased for the past eight years and in 1999 it witnessed a 32% jump, according to Glenn Gundersen, author of Trademark Searching.) The name can’t sound too much like someone else’s company. Another problem with naming a company is the board of directors doesn’t want to lose the momentum a company’s brand name already holds. The moniker needs to attract consumers and be advertising-friendly. Then there’s the art aspect; the name should be easy to illustrate so a logo can be drawn up. And after all that, the odds are good that someone won’t like it.
How do you find a name not yet used? Some naming consultants say that’s quite a tough task. According to Athol Foden, director of naming at branding consulting firm Cintara (which, ironically, recently changed its own name from Name Trade), almost all the words in the English dictionary are already taken.
Naming and branding consultants estimate the cost for a big company to change its name—in addition to a lot of memos, email, hours, and months—is usually just shy of one million dollars. But throw in the new advertising and branding campaigns that must usher in a new moniker, the new billing and customer service systems that must now proclaim one name, new stationery and logos, and we’re talking a lot more. Make it a name that no one gets, and the costs multiply.
"A bad name costs a lot of money in marketing," says Foden.
Last October, another wireless behemoth was christened with a very un-Bell like name. The joint venture of wireless properties of SBC Communications and BellSouth, which was announced in April 2000, was given the moniker Cingular. Some critics disliked the purposeful misspelling of the familiar word. When questioned about the name, executives said Cingular signifies the coming together of the two separate wireless units. The name shows the importance of the customer and was also found to be easy to pronounce by focus groups, said Steven Carter, president and CEO of Atlanta-based Cingular Wireless, which will serve close to 19 million customers and rake in some $12 billion in annual revenue.
Even though the big announcement for the name change was heralded at a press conference back in October, consumers will continue to see the BellSouth and SBC brands and likely won’t get to know the Cingular name until first quarter 2001. Carter said the delay in pitching consumers is to allow the carrier to have some time and avoid being lost in November’s sea of presidential election coverage and an ocean of holiday messages that can drown a branding strategy.
Name changes have been done to get the attention of the fussy stock market. Two years ago it was all about adding a ".com" and watch the stock go mountain climbing. There’s no place in today’s slick advertising marketing medium for a company that’s name starts with "Bell."
To up the hip quotient, marketing professionals are brought in, focus groups are quizzed, and internal careers are made or played in trying to come up with a name that excites the consumer. In many cases, the name change has paid off handsomely (or had superb timing to enjoy the other conditions of the market that make the name change look ingenius). Remember Northern Telecom? It changed its name to Nortel Networks and has, until recently, enjoyed a lofty stock performance. Unwired Planet went under the new name of Phone.com in April 1999 and watched its stock rocket from $15 to $210 and split three times after the change. Software.Net went to Beyond.Com in May 1999 and got an initial $10 boost. And wireless paging company Pagemart saw strong returns of its stock price doubling within a month after it changed its name to Weblink Wireless on December 1, 1999. Within five weeks, its stock price had gone from trading in the $6 to $10 range to trading in the $18 to $20, and was trading at a high of $27 in February 2000, as the rest of the technology stocks were enjoying a wild ride on Wall Street.
WebLink executives said the name change—which was determined with the help of an outside marketing firm—gave employees a morale boost and helped customers envision the new services that WebLink was looking to offer.
"Since we had this cool new network capability and planned to increase our services, the name Pagemart just didn’t cut it anymore," said Doug Glen, vice president of corporate development at WebLink Wireless. Glen said the name change better reflected the new services the company was introducing and helped the street and investors to realize the company’s focus on wireless data capabilities that were being hidden in the stale and dated name Pagemart.
But the name change practice doesn’t always work. Take InfoSpace.com, which decided to drop the .com from its name last March. Coincidence, maybe, but its stock price was cut in half, from $130 to $59 following the decision.
Some company names, now dubbed a huge hit in retrospect, had to go through their own taunts. When AT&T’s research unit was spun off, it was eventually and painstakingly renamed Lucent Technologies. Since it was probably the first big example of a blue-chip company taking on an esoteric name, reporters and columnists had a field day over the name selection for months. Especially criticized was Lucent’s company’s logo: a big, red, seemingly handwritten "O" that got everyone’s wise-guy instincts up to the surface. Columns were dedicated to chastising the ugly symbol and the good money spent to come up with it.
But guess which of the company renames qualify as a winner in Athol’s book? Lucent joins another famous renamed giant, Cingular, in taking the trophy. Lucent is an inspiring improvement over the original moniker AT&T Laboratories, a name that would hardly get Wall Street’s pulses pumping. "We now think of Lucent as an English word meaning "clarity." It was a brilliant choice because they were renaming AT&T Labs, which had a big, old, starchy research image."
Of course, two years after the name change and Lucent’s stock is suffering madly. A name change may give a company some ink and a temporary boost in the stock price, yet there’s no long-term promises from adopting a new moniker.
But, hey, even if a stock is on a slide, a glossy new name ensures that at least it will sound good on the way down.
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