Magazine

Stars That Fell From The List


AMD

In 2004, Advanced Micro Devices Inc. (AMD) had its best year in a decade, stealing the limelight from giant Intel Corp. (INTC) with its new high-performance microprocessors. That put it at No. 40 on last year's Info Tech 100. This year? As CEO Hector de J. Ruiz described it, "we had a freaking miserable" first quarter. The chipmaker saw profits dragged down by its money-losing memory-chip business. The results helped sink AMD's stock to $17, well off its 52-week high of $24.95. Ruiz has since decided to spin out memory chips, a move that should give investors a better sense of whether this perennial underdog can thrive or just survive against Intel.

CHINA UNICOM

China is the world's biggest cellular market, with more than 350 million subscribers. So you might think China Unicom would be sitting pretty. Yet Unicom, one of the country's two carriers and the only one to operate a network based on Qualcomm's CDMA technology, has been struggling -- while market leader China Mobile has prospered. Last year, Unicom's profits fell 24%, to $193 million, while sales rose just 7%, to $2.5 billion. Why? Customers have been slow to adopt CDMA because the handsets are more expensive and coverage isn't as good.

eBAY

EBay Inc. (EBAY) is solidly profitable on expected 2005 sales of $4.3 billion, up more than 30%. So why on earth did it fall off the Info Tech 100? Because the 10-year-old online marketplace's growth, especially in mature U.S. and German markets, is slowing. That has knocked its stock price down 33% since the start of the year. CEO Meg Whitman is facing rising competition from many quarters. Some large merchants are opting to sell merchandise on Amazon.com Inc. (AMZN) or buy keywords on Google Inc. (GOOG) to drive customers directly to their Web sites. But eBay isn't sitting still. With recent purchases of comparison-shopping site Shopping.com, apartment-rental service Rent.com, and several classified ad sites, it's aiming to broaden its appeal to more kinds of merchants and buyers.

ELECTRONIC ARTS

For a while, the king of independent game publishers looked unstoppable. Key franchises such as Madden NFL Football and Harry Potter helped the Redwood City (Calif.) giant rake in $3.1 billion in sales for fiscal year 2005. But investors were shocked earlier this year when CEO Larry Probst reported disappointing results and predicted current-year earnings could fall short of expectations. That sent EA's (EA) stock tumbing 11%. The problem? Consumer spending softened as gamers waited for new consoles, due out next year. And EA's offerings last holiday did not appeal to consumers as much as rival Take Two Interactive's newest version of Grand Theft Auto. To get its mojo back, EA is counting on a strong 2005 holiday lineup, including a James Bond game featuring Sean Connery.

HEWLETT-PACKARD

After trumpeting its merger with Compaq Computer as a success during much of 2003, Hewlett-Packard (HPQ) stumbled last summer. While its printer business remained profitable, its offerings in storage, servers, PCs, and software -- many of the units expected to be buttressed by the Compaq deal -- lost either market share or money. The troubles cost Chief Executive Carleton S. Fiorina her job in February. New CEO Mark Hurd has yet to spell out his game plan, but investors are cautiously optimistic: HP's stock has climbed 14%, to $22.58, since word of his arrival.

LEXMARK INTERNATIONAL

In 2003, Lexmark International Inc. (LXK) started making printers for Dell Inc (DELL), boosting the company's sales volume and propelling it to No. 47 on last year's Info Tech 100. The party continued through much of 2004, as Lexmark exceeded Wall Street's earnings expectations. But sales growth stalled in the first quarter of 2005, dropping to 8% -- lower than in each of the three previous quarters. Earnings also fell below expectations. That sent Lexmark's shares down 14%. Among the reasons for the bad news: softening consumer demand and increasing price competition.


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