THE CHRONICLE 500

Top 500 shaken and stirred by this year's bubble-burst

Intel moves to top, Yahoo takes a drop Arthur M. Louis, Chronicle Staff Writer, Monday, May 7, 2001

©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/07/BU229105.DTL&type=news

The more things change, the more they remain the same.

When The Chronicle surveyed the 500 Bay Area companies with the largest market capitalizations a year ago, their total value had nearly tripled in just 12 months.

Now, in the wake of the brutal beating that stocks -- particularly high- technology stocks -- suffered between March of last year and April of this year, the value of The Chronicle 500 is back down to roughly where it was before the great run-up began.

Of the 500 companies in this year's survey, 375 -- 3 out of 4 -- declined in market value during the past year. More than half the companies, a total of 266, shed at least half their value. The net result: The Chronicle 500 was worth a total of $1.3 trillion in the stock market as of our April 5, 2001, cutoff -- down from $3.15 trillion last year.

In the runaway bull market that topped out on Nasdaq in March 2000, many stocks soared to price-earnings ratios no one could justify rationally. That left much of the market extremely vulnerable to earnings disappointments.

When the economy suddenly cooled and many companies began to report or warn about weak earnings, the market collapsed. While The Chronicle 500 gained nearly 30 percent in total sales last year -- to $563 billion -- fewer than half the companies posted earnings increases. Total earnings for the group dropped to around $17.6 billion from more than $28.2 billion the year before.

The top three companies on last year's list -- Cisco Systems, Intel and Oracle -- had their market caps slashed by 78 percent, 60 percent and 63 percent, respectively, year-to-year. And yet, so widespread was the carnage up and down the 500 roster, all three companies continued to rank at the very top of the list this time.

There was, however, a slight reshuffling among the trio.

Santa Clara chipmaker Intel replaced San Jose networking giant Cisco in the top spot, even though its value collapsed from $434 billion last year to $172. 1 billion this year. Cisco, which from time to time had ranked as the most valuable company in the nation, not just the Bay Area, saw its market cap plunge to $108.7 billion from $500.4 billion.

Oracle, the Redwood Shores softwaremaker, continues to rank third with a market cap of $82.3 billion -- way down from $220.8 billion last year. One of the most prominent losers among The Chronicle 500 was Yahoo Inc., the Santa Clara Internet portal. Like many other dot-com companies whose earnings prospects had been exaggerated in the public mind, its stock shriveled during the year to a shade of its former self, losing 90.8 percent to $8.6 billion. It tumbled to 30th place on this year's list from a lofty seventh place last year, when its market cap stood close to $90 billion.

Another humongous loser was 3Com Corp., the Santa Clara networking company best known for bestowing its good name on the old Candlestick Park. 3Com followed a big profit in 1999 with a big loss in 2000. Its market cap tumbled 90 percent to $1.627 billion, ranking it 87th on this year's list -- down from 26th.

At the other end of the spectrum, a precious few companies, 16 in all, more than doubled their stock values during the year. The value of Calpine Corp., a San Jose electricity producer, shot up 179 percent to $14.4 billion, ranking it 15th on the list. Last year it was in 70th place. Calpine's earnings more than tripled as it took advantage of California's energy crisis to charge megabucks for its megawatts.

Alza, the Mountain View biotech company, enjoyed a 104 percent gain in market cap to $10 billion, which lifted it to 25th place from 105th. Part of Alza's stock gain was due to the company's great success with its drug-delivery products, which caused earnings to more than double last year. The rest of the gain came courtesy of drugmaker Johnson & Johnson, which said in March that it would buy Alza at a fat premium to its market value.

Several large Bay Area companies that were untainted by the high-tech stigma rose considerably on this year's 500 list. Chevron, the San Francisco oil giant, moved from 12th place to sixth this year, even though its market cap crept up only slightly, to $57.5 billion.

Safeway, the Pleasanton supermarket chain, roared all the way to ninth place from 30th, as its market cap jumped from $22.9 billion to $27.5 billion.

Providian Financial, the San Francisco consumer lender, which ranked 45th last year, soared to 17th this year. Its market cap gained modestly, to $13.6 billion from $11.7 billion.

E-mail Arthur M. Louis at alouis@sfchronicle.com ©2001 San Francisco Chronicle Page D - 2

-- Swissrose (cellier3@mindspring.com), May 07, 2001