BUSINESSWEEK ONLINE : JUNE 19, 2000 ISSUE
COVER STORY Why They Fell off the List Some of the most famous companies dropped out of the IT 100 this year. Here's what happened--and the prospects for these stars to shine again AMAZON.COM A double whammy knocked Amazon.com Inc. (AMZN) off the Info Tech 100 list this year. First, it lost a breathtaking $390 million last year--more than five times its 1998 loss. Worse, investors also turned cold on the notion of dot-com losses, leaving Amazon's stock languishing at virtually the same price as a year ago. Is Amazon's reign over? Not a chance. Its losses likely hit a peak in December--and may finally end by 2002. Indeed, the struggles of Amazon's e-tailing rivals have only reinforced its leadership: With 20 million customers, Amazon is seen by analysts as the one e-tailer almost sure to survive. EBAY Last year, auctioneer eBay Inc. (EBAY) was the poster child for high-flying Net stocks. Its shares soared to a 2,125 price-to-earnings ratio, compared with about 25 for most stocks. That helped propel eBay to No. 23 in last year's Info Tech 100. But with the tech stock meltdown, eBay's shares are down 35% from last year, cutting the company out of the ranking. Still, eBay is a more mature company now. It has 12.6 million users, up 25% from the end of the year. And, hey, its stock is practically cheap: eBay's p-e ratio is down to a mere 898. IBM Last year, IBM (IBM) coasted into the No. 15 spot on our Info Tech 100 list. This year, IBM didn't even make the first cut: Sales were up by just 2.6% for the most recent 12 months--way below the computer and peripherals average growth rate of 6%, eliminating IBM from our list. The company stumbled in disk drives, PCs, and storage. Monster computers still generate the bulk of IBM's revenues and profits--meaning it got hit hard by Y2K. Until Big Blue weans itself from big metal, it will end up black and blue every time the industry hits turbulence. QWEST It has been a rough year for Joseph Nacchio, chief executive of Qwest Communications International (Q). Wall Street hated his bid to acquire giant U S West. After he struck a deal to merge with the Denver Baby Bell, he considered selling Qwest to German giant Deutsche Telekom. But U S West blocked the sale. All the shenanigans have left Qwest's stock wallowing near where it was a year ago. It was up just 6% for the 12 months ended May 15. The mediocre stock market performance helped knock Qwest out of the Info Tech 100, where the company ranked 18th last year. INTEL The past 12 months haven't been cruel to Intel Corp. (INTC), No. 43 in the 1999 Info Tech list but a no-show in this year's ranking. Profits are up nearly 30%, and its stock doubled. But Intel's sales grew much more slowly than the chip industry's 19% clip. That's because demand for the most powerful chips is soft, since even dirt-cheap PCs have enough power for Web surfing and basic programs. Now the world's biggest semiconductor company is expanding beyond PCs into chips used for networking gear, wireless phones, and Internet appliances. If it works, Intel could shine again in the IT 100. LUCENT TECHNOLOGIES Bell Labs Innovations Wall Street analysts are not kind to companies that disappoint them. When Lucent Technologies Inc. said in January that it would miss its earnings projections, its stock tumbled 23%. That helped eliminate Lucent from the Info Tech 100, in which it nabbed the No. 19 spot last year. To get its edge back, Lucent has to improve its performance in key markets. It's way behind in optical equipment and Web routers, for example. If it doesn't catch up, one bad quarter will be the least of Lucent's worries. QUALCOMM Qualcomm Inc.'s (QCOM) bubble hasn't burst--it has exploded. Although the company's stock is up 284% for the year ended May 15, that's not what investors care about these days. Shareholders have seen Qualcomm's stock drop a sickening 65% since the beginning of the year. Much of the blame goes to Irwin M. Jacobs, co-founder and CEO of the wireless-technology pioneer. Qualcomm has excellent growth prospects. But Jacobs' often outlandish promotion led many to believe that Qualcomm would reap huge royalties because its technology would be used in all the world's cellular phones. That's looking like wishful thinking these days as competitors develop their own wireless technology. AMERITRADE Stock portfolio in the dumps? Take comfort in the fact that your broker isn't faring any better. A drop in online trading has crunched Ameritrade Holding Corp. (AMTD), No. 30 last year on the Info Tech 100. Ameritrade's stock has slid to 11 from a high of 43 1/2. Its long-term prospects may be brighter. A $54.8 million marketing campaign, led by slacker trader ''Stuart,'' drew 319,000 new customers in the first quarter. That's more than the company brought in all of last year. Even better, the cost per new account was just $172, cheaper than for competitors E*Trade and DLJDirect. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					INTERACT E-Mail to Business Week Online

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