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Online Extra: Stars That Fell from Grace


It's hard for even Corporate America's best-run companies to deliver torrid performance numbers year after year. That's why the BusinessWeek 50 list, now in its ninth year, has always seen plenty of turnover. This year, a full 60% of the top 50 companies are new -- a turnover rate in line with previous editions of the list.

Below, we look at five renowned outfits that have made a habit of appearing on the BusinessWeek 50 list -- but not this year.

GENERAL ELECTRIC. Although it made our list three times -- in '98, '99, and '00 -- General Electric (GE) hasn't appeared since. In those brighter days, its stock enjoyed a hefty premium under the final days of Jack Welch, with shares hovering above $60 before he stepped down in September, 2001.

But the drop in its stock price (GE was recently trading near $35) isn't just about Welch's departure. GE benefited from an unprecedented build-up in demand for power turbines during the late 1990s, making GE Power Systems one of its strongest businesses. That bubble burst around the time that Jeffrey Immelt came to office, leading to tough times in that industry.

GE is also hurt in the BusinessWeek 50 measurement by its debt-to-capital ratio: at 77.1, it ranks No. 458 among S&P 500 companies and may reflect the high proportion of financial businesses in GE's portfolio. Immelt has spent a lot of time shifting the portfolio toward higher-growth businesses such as biotechnology, spending more than $60 billion on new acquisitions while committing to sell about $15 billion worth of assets.

MBNA. The credit-card giant turned consumers' ever-growing lust for more debt into huge profits, fat margins, and outsize revenue gains in the late '90s and early part of this decade. That performance -- thanks in part to its thousands of affiliate programs, with universities and professional associations, for example -- has landed MBNA (KRB) on the BusinessWeek 50 list six times since 1997, most recently in 2004.

But even in 2005, when it became the first bank to issue American Express (AXP) cards, MBNA's sales growth was less than expected, and the stock slumped. With the market saturated, credit-card growth has finally leveled off. That's bad news for MBNA, which is the only so-called "monoline" left -- credit cards are all MBNA has.

New Chief Executive Bruce Hammonds is out to fix that. He's undertaking the first-ever major restructuring in an effort to cut costs and diversify internationally, while also getting into new businesses such as home-equity loans.

HOME DEPOT. It has been a roller-coaster ride for Home Depot (HD) in recent years. After Chief Executive Robert Nardelli took over in late 2000, the tough task of righting the unwieldy home-improvement retailer caused its stock to tumble in early 2003 and same-store sales comparisons to decline. Still, the Atlanta-based chain made the BusinessWeek 50 three of the last five years ('00, '02, and '04) and five times in all.

Now, Nardelli has Home Depot back on track. A combination of international expansion, a move into urban markets, and an increased emphasis on installation services helped boost sales 13% last year, to $73 billion. Profits climbed 16%. But that wasn't enough to regain a spot in this year's BusinessWeek 50, in large part because the three-year total return to shareholders was down by 18%, ranking it at No. 420 among the S&P 500 in that category. On the stock-price front, Home Depot still has some repair work to do.

PFIZER. The world's largest drug company was a BusinessWeek 50 mainstay, appearing five times in the first eight iterations of the list. Pfizer's (PFE) formula of developing blockbuster drugs and backing them with massive advertising campaigns served it well then but has hit a wall in the past year as the new product pipeline has come up dry.

Sales of megahits such as Viagra have slowed as rafts of competitors entered the market. Then there was the news linking widely prescribed Cox-2 inhibitors, including Pfizer's $3.3 billion Celebrex and $1.3 billion Bextra, to cardiovascular problems.

Chief Executive Henry "Hank" McKinnell has braced employees for changes at the drugmaker, including cost-cutting measures, while maintaining that the outfit's size gives it an inherent advantage over industry rivals all scrambling to produce the next big drug.

INTEL. When the BusinessWeek 50 list debuted in 1997, the Santa Clara (Calif.) chipmaking king was at the very top. After the bubble, like most other technology companies, Intel (INTC) tumbled. But it has been steadily recovering since 2001, even popping up on last year's BusinessWeek 50 -- its fifth inclusion.

Intel missed the cut in 2005, dropping from No. 37 in '04 to No. 55 this year, as it struggled with factory snafus and execution missteps. Those woes were reflected in Intel stock returns, down by 17.2% for the 12 months ended Feb. 28. But its execs have been taking action, reorganizing divisions, and rolling out new chips. Profits rose 33% last year, to $7.5 billion, on 13% higher sales, of $34.2 billion. And first-quarter results should show further improvement. By Brian Hindo in New York

EDITED BY Edited by Patricia O'Connell


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