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The Information Technology 100: Methodology


To compile the Information Technology 100, BusinessWeek began with financial data from Standard & Poor's, a division of The McGraw-Hill Companies that has computerized information on 10,000 publicly traded corporations. We trimmed this universe to information-technology companies and then added non-U.S. tech companies recommended by our network of foreign bureaus. To qualify, companies had to have revenues of at least $500 million.

We divided this collection of about 500 companies into eight industry categories, such as software and semiconductors. Companies whose stock price has dropped more than 75%, whose sales shrank, or where other developments raised questions about future performance, were eliminated from contention. We also dropped some phone companies whose monopoly or near-monopoly power in their countries gives them an unfair advantage over competitors. The remaining group of companies was ranked on four criteria: return on equity, shareholder return and revenue growth (which were given equal weight), and total revenues (which was weighted). Then, the top 100 companies were reranked as a group.

REVENUES

Latest available revenues for the most recent 12-month period for U.S. companies and the latest annual revenues for non-U.S. companies. Includes all sales and other operating revenues.

REVENUE GROWTH

Percentage change in revenues compared with the previous corresponding year-ago period, in native currency.

RETURN ON EQUITY

Net income available for shareholders divided by common equity, in native currency.

TOTAL RETURN

The total return to shareholders, including dividends for the 12 months ended May 31, 2006.

PROFITS

Latest available profits for the latest 12-month period for U.S. companies, the latest annual profits for non-U.S. companies. Net income from continuing operations before extraordinary items.

NOTE

Data compiled by Standard & Poor's from sources such as statistical services, registration statements, and company reports that S&P believes to be reliable but are not guaranteed by S&P or BusinessWeek as to correctness or completeness. This material is not an offer to buy or sell any security.


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