10 GREATEST BLUNDER IN HISTORY

Blunderer: Ford Motor

Blunder: The Edsel

In the mid-1950s, flush with the exceptional success of the Thunderbird, Ford wanted to create a new model to compete head-to-head with General Motors' Oldsmobile. (The Ford Lincoln had served that purpose, but it was getting a makeover to go against GM's higher-end Cadillac.) Ford's solution: the Edsel, named for founder Henry Ford's son. Despite all the hype--including a television special called The Edsel Show--Ford whiffed on three fronts: style (the car looked too much like other Ford models), size (too large, given the growing trend toward compact cars), and price (initially intended to be priced between a Lincoln and the lower-tier Mercury, the Edsel actually fell within Mercury's price point, and thus confused consumers). Ford sank $350 million (in 1950s dollars) into the Edsel before calling it quits; production ceased Nov. 19, 1959.

Size Of Blunder: $2.5 billion













Blunderer: Motorola

Blunder: Iridium

Backed by $6 billion from Motorola, satellite-telephone provider Iridium launched in November 1998--and filed for Chapter 11 bankruptcy just nine months later, citing "difficulty gaining subscribers." Iridium's downfall: the rise of mobile phones and cellular networks. Absentee customer-service reps and annoying flaws in the company's Web site that made it difficult to apply for service didn't help, either.

Size Of Blunder: $8 billion

Blunderer: Enron Executives

Blunder: Greed and deception

The now infamous Houston-based energy company created offshore entities to hide huge losses--maneuvers that even a careful read of its opaque financial statements could hardly detect. Analysts turned sour on the company in the summer of 2001; Enron filed for bankruptcy before year's end. From its peak market cap of $78 billion, the equity is now worthless, and key executives--including Chief Operating Officer Jeffrey Skilling and Chief Financial Officer Andrew Fastow, are doing jail time on charges including securities fraud and insider trading.

Size Of Blunder: $93 billion

Blunderer: Czar Alexander II, On Behalf Of Russia

Blunder: Sale of Alaska

Fearing he would lose Alaska by force, Czar Alexander II advised Russian minister Eduard de Stoeckl to offer a 586,412 square mile ice block--Alaska--for sale to the U.S. Following an all-night negotiation, the agreement was signed March 30, 1867. The U.S. paid $7.2 million--1.9 cents per acre--for a land rich in oil and gold, currently valued at $100 billion, according to Matthew Mondanile of Cushman & Wakefield. At the time of the sale, famed journalist Horace Greeley of the New York Tribune called the purchase both "inconvenient" and "dangerous" for the U.S., as the territory offered "nothing of value but furbearing animals." Alaska became a U.S. state in 1959.

Size Of Blunder: $100 billion

Blunderer: Xerox

Blunder: Lifting the kimono

In the early 1970s, Xerox developed world-changing computer technology, including the mouse and the graphical user interface. (Modern GUIs include Microsoft Windows and Mac OS X.) One of the devices was called the Xerox Alto, a desktop personal computer that Xerox never bothered to market. (Who would want something like that?) A decade later, several Apple employees, including Steve Jobs, visited the Xerox PARC research and development facility for three days in exchange for $1 million in Apple's still-privately held stock. That educational field trip was well worth the price of admission (Apple stock now worth $3.5 billion), given that it helped Jobs build a company now worth $110 billion. In the late 1980s, Xerox sued Apple for using GUI technology in its Macintosh computer, but the case was dismissed--the statute of limitations on the dispute had passed.

Size Of Blunder: $107 billion

Blunderer: Time Warner Shareholders

Blunder: The merger of AOL and Time Warner

On Feb. 11, 2000, Internet portal America Online, then valued at $108 billion, swallowed media stalwart Time-Warner (worth $111 billion) for $164 billion in an all-stock deal. AOL owned 55% of the new, combined company; Time-Warner, 45%. Then came the tech wreck of 2001, followed by the rise of stiff competitors Yahoo! and Google. As cultures clashed and the stock price tanked, the company in 2002 reported a one-time write-off of $99 billion--at the time, the largest corporate loss ever reported. At its nadir, the firm boasted a meager market cap of $48 billion--$171 billion less than at the time of the merger. Time Warner is now worth about $53 billion.

Size Of Blunder: $196 billion

Blunderer: Seattle Computer Products

Blunder: Sale of the DOS operating system

Back in 1980, Tim Paterson, a 24-year-old programmer at Seattle Computer Products, spent four months writing the 86-DOS operating system. Meanwhile, Bill Gates was on a hunt for operating software that Microsoft could license to IBM; Big Blue had the money and factories to build computers, but not the operating system to run them. Gates bought the DOS system for a pittance: $50,000. When Seattle Computer figured out what it had let slip through its fingers, it accused Microsoft of swindling the company by not revealing that IBM was its customer; Microsoft settled by compensating Seattle Computer an additional $1 million in 1986. Big deal--the market for the rest of Microsoft's cool software had been born, and there was no looking back. Arguably, this key deal ultimately propelled Microsoft to software domination--and its current $253 billion valuation.

Size Of Blunder: $253 billion

Blunderer: Napoleon, On Behalf Of France

Blunder: The sale of the Louisiana Territory

In 1803, Napoleon was struggling to defend all the land France had acquired in the New World, specifically Haiti, which was in the midst of a slave revolt. With his army stretched thin, and unwilling to relinquish Haiti, Napoleon offered to sell the entire territory of Louisiana, rather than just the port of New Orleans, as had previously been discussed. The offer: $15 million--3 cents per acre--or about $284 million today. The current value of that land (now including portions of 15 U.S. states and two Canadian provinces): around $750 billion, estimates Matthew Mondanile of Cushman & Wakefield. And Haiti? Less than a year after France inked the sale, Haiti won its independence.

Size Of Blunder: $750 billion

Blunderer: The Canarsees

Blunder: The sale of Manhattan island

How could they have known? In 1626, Canarsee natives traded for trinkets a now rather stylish plot: Manhattan (then called New Amsterdam). The 23 square miles many New Yorkers consider "the center of the universe" is now valued at a cool $1 trillion, estimates Matthew Mondanile of global commercial real estate firm Cushman & Wakefield. In another short-sighted deal, the Dutch later traded New Amsterdam to Great Britain for what is now the Republic of Suriname, a small country in South America with a wee gross domestic product of $2.9 billion.

Size Of Blunder: $1 trillion

Blunderer: The World's Central Banks

Blunder: Global economic upheaval

U.S. Federal Reserve Chairman Ben Bernanke and his counterparts across the globe have the power to jump-start or derail entire economies by cranking the credit spigot open or closed. Rubert Mundell, winner of the 1999 Nobel Prize in economics, has argued that "bungled monetary policy in the 1920s and 1930s caused chronic deflation [falling prices] and destabilized the world," writes author Charles Wheelan in his book Naked Economics. Mundell's argument: "'Had the price of gold been raised in the late 1920s, or, alternatively, had the major central banks pursued policies of price stability instead of adhering to the gold standard, there would have been no Great Depression, no Nazi revolution, and no World War II.'" Those are fighting words--let's hope Bernanke and company don't earn a spot on this list.

Size Of Blunder: Our calculator just broke.