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Tech Hot Growth Companies 2010

  1. Chinese Companies Rise
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    Chinese Companies Rise

    It should come as no surprise that China, the country that built the world's fastest supercomputer, can lay claim to another international digital speed record: home to the world's fastest-growing technology company—Tencent Holdings. Actually, China is home to two of the three hottest growth companies on Bloomberg Businessweek's 2010 list of Tech's Hot Growth Companies. Tencent (No. 1) and Baidu (No. 3) bracket the ever popular Apple, which ranks No. 2 on our list.

    How did we come up with our ranking? Companies must have 500 or more employees, at least $500 million in sales, and a market value over $100 million, among other metrics. The 424 companies that made the first cut (from a database of 479,000 companies) were weighted on several scores including sales growth, return on invested capital, and the change in number of employees. Click through the slides that follow to see the top 25 companies. Our interactive table has the complete list of 50 companies and a more detailed explanation of our methodology.

    Source: Bloomberg
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  2. No. 1 Tencent Holdings
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    No. 1 Tencent Holdings

    Country: China
    Market Value: $43.5 billion
    Sales: $2.6 billion

    Sales Growth: 64%
    Employee Growth: 21%
    Return on Investment: 52%
    Total Return: 33%

    The world's largest online gaming company, Tencent Holdings (700:HK), is cash-rich following a blockbuster year. Virtual weapons sales in games such as CrossFire helped generate $2.62 billion in cash or equivalents, according to the company's third-quarter filing. That's led to speculation about possible takeovers beyond China's borders, according to analysts cited in a recent article. For the more serious-minded, the 12-year-old company also provides instant messaging, online advertising, e-commerce, telecommunications, and operates the popular QQ.com portal.
    Bloomberg
  3. No. 2 Apple
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    No. 2 Apple

    Country: U.S.
    Market Value: $287.5 billion
    Sales: $65.2 billion

    Sales Growth: 52%
    Employee Growth: 36%
    Return on Investment: 34%
    Total Return: 65%

    Apple (AAPL) continues an unparalleled run of wildly popular consumer electronics and computers with the introduction of a fourth-generation iPhone sporting video-chat capability, a new MacBook Air laptop, and a multitouch iPod Nano. Oh yeah, the company also launched a little thing called the iPad. Once again an Apple product sucked all the air out of the market, capturing the buzz and consumer excitement, not to mention 4.2 million new customers in the fourth quarter. And the latest version of the iPhone is no slouch either. In the fourth quarter, 14.1 million phones flew out the door, outselling Research In Motion's (RIMM) cell phones by 2 million units.
    Bloomberg
  4. No. 3 Baidu
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    No. 3 Baidu

    Country: China
    Market Value: $34.7 billion
    Sales: $987 million

    Sales Growth: 64%
    Employee Growth: 15%
    Return on Investment: 47%
    Total Return: 147%

    Baidu's (BIDU) stock price has more than doubled since Google (GOOG) essentially pulled out of China nearly a year ago. The Chinese search company and Web portal has a 73 percent market share in China and is now the fifth-largest Internet company in the world based on market capitalization, behind Google, Amazon.com (AMZN), Tencent, and eBay (EBAY). To get the inside line on how the company took the top spot in China, check out Bloomberg Businessweek's recent cover story "How Baidu Won China."
    Bloomberg
  5. No. 4 Lam Research
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    No. 4 Lam Research

    Country: U.S.
    Market Value: $5 billion
    Sales: $2.6 billion

    Sales Growth: 164%
    Employee Growth: 19%
    Return on Investment: 31%
    Total Return: 11%

    Lam Research (LRCX) is one of five manufacturers of semiconductor processing equipment on this year's list. The Fremont (Calif.) company topped the others thanks to a 164 percent jump in sales, to $2.6 billion. For makers of semiconductor processing equipment like Lam, it's the trickle-down effect: Consumers are buying more smartphones, tablet computers, and e-book readers—and fewer PCs. That's put pressure on chip and display makers to ramp up production of components for those products, which in turn means they need to order more production equipment.
    LamResearch
  6. No. 5 Aixtron
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    No. 5 Aixtron

    Country: Germany
    Market Value: $3.3 billion
    Sales: $918 million

    Sales Growth: 153%
    Employee Growth: 11%
    Return on Investment: 42%
    Total Return: 9%

    Strong demand from customers in Asia helped catapult this German maker of deposition equipment—used to make chips and electronics for computers, lighting, and cell phones—to the top five of our ranking. The company reported in the third quarter that the future outlook for Aixtron (AIXA:GR) looks bright as LED use spreads. Aixtron is a leader in producing organic chemical vapor deposition equipment necessary to create LED lights for everything from computers and televisions to autos, homes, and street lamps.
    Aixtron
  7. No. 6 Cognizant
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    No. 6 Cognizant

    Country: U.S.
    Market Value: $20 billion
    Sales: $4.2 billion

    Sales Growth: 34%
    Employee Growth: 27%
    Return on Investment: 23%
    Total Return: 66%

    Founded in 1994, Cognizant (CTSH) offers a mix of outsourcing and consulting services to companies in the financial sector. Led by Chief Executive Officer Francisco D'Souza, above, the Teaneck (N.J.) company, which focuses on the financial-services sector, saw sales increase 66 percent to $4.2 billion. That's just $1.2 billion less than Infosys (INFY), a main competitor with double the market cap that's No. 33 on our list.
    Bloomberg
  8. No. 7 Software AG
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    No. 7 Software AG

    Country: Germany
    Market Value: $3.8 billion
    Sales: $1.5 billion

    Sales Growth: 41%
    Employee Growth: 71%
    Return on Investment: 15%
    Total Return: 51%

    This year, Software AG (SOW:GR) started seeing a return from its August 2009 acquisition of IDS Scheer, which specializes in business process management software. Software AG had double-digit growth in the U.S. and Brazilian markets, while the IDS deal helped propel its consulting business.
    Bloomberg
  9. No. 8 Vtech Holdings
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    No. 8 Vtech Holdings

    Country: Hong Kong
    Market Value: $2.6 billion
    Sales: $1.6 billion

    Sales Growth: 14%
    Employee Growth: 27%
    Return on Investment: 44%
    Total Return: 27%

    Hong Kong-based VTech Holdings (303:HK) cleaned up on strong sales of cordless telephones and its V Smile line of educational toys for toddlers in America and abroad. But the good times may not last: Chairman Allan Wong Chi Yun warned in the 2010 annual report that rising costs of components and labor in China may lower profits in coming years.
    Vtech
  10. No. 9 Oracle
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    No. 9 Oracle

    Country: U.S.
    Market Value: $145 billion
    Sales: $29.4 billion

    Sales Growth: 28%
    Employee Growth: 22%
    Return on Investment: 17%
    Total Return: 37%

    Oracle (ORCL) founder and Chief Executive Officer Larry Ellison has made more than 65 acquisitions since the beginning of 2005 to expand into computer servers, business applications, and middleware as he positions Oracle to become a one-stop supplier of information technology. But it's Ellison's acerbic comments that kept everyone entertained this fall as he traded barbs with the Hewlett-Packard (HPQ) board over the resignation of former HP CEO Mark Hurd, then hired Hurd, traded more barbs with the HP board, then tossed barbs at SAP (and its former CEO), finally culminating in a $1.3 billion award in a federal copyright infringement case against rival SAP (SAP). Not a bad year for Ellison.
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  11. No. 10 Western Digital
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    No. 10 Western Digital

    Country: U.S.
    Market Value: $7.3 billion
    Sales: $10 billion

    Sales Growth: 33%
    Employee Growth: 36%
    Return on Investment: 28%
    Total Return: -12%

    As the market has shifted from desktop computers to laptops and other mobile devices, so has storage device maker Western Digital (WDC). Revenue from non-desktop devices jumped from 29 percent in 2006 to 64 percent in 2010. And as consumers store more and more digital content, especially video, they'll always need storage.
    Bloomberg
  12. No. 11 Varian Semiconductor Equipment Associates
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    No. 11 Varian Semiconductor Equipment Associates

    Country: U.S.
    Market Value: $2.2 billion
    Sales: $831 million

    Sales Growth: 130%
    Employee Growth: 18%
    Return on Investment: 18.5%
    Total Return: -9%

    Reading high-tech trends can be tricky, but if you're looking for one company that's a bellwether for the fortunes of the semiconductor industry, it's Varian Semiconductor Equipment Associates (VSEA). The company sells the essential equipment—ion implantation systems—used in the manufacture of semiconductor products. What makes Varian a proxy for industry trends? Its 10 largest customers are among the biggest producers of semiconductors worldwide and account for 80 percent of Varian's revenue.
    Varian
  13. No. 12 Shanda Interactive Entertainment
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    No. 12 Shanda Interactive Entertainment

    Country: China
    Market Value: $2.7 billion
    Sales: $818 million

    Sales Growth: 30%
    Employee Growth: 83%
    Return on Investment: 14%
    Total Return: -16%

    Who knew the Chinese are such gamers? Shanda Interactive Entertainment (SNDA) has seen sales jump 30 percent as more people play its online role-playing games, as well as online chess, board games, and other interactive entertainment. Growth hasn't come without costs: Shanda's third-quarter results announced on Nov. 30 revealed that profits slid 77 percent, worse than analysts' expectations.
    Bloomberg
  14. No. 13 Super Micro Computer
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    No. 13 Super Micro Computer

    Country: U.S.
    Market Value: $429 million
    Sales: $780 million

    Sales Growth: 53%
    Employee Growth: 20%
    Return on Investment: 14%
    Total Return: 33%

    Super Micro Computer (SMCI) manufactures high-performance servers and recently expanded into enterprise storage systems. Now that more businesses are investing in new servers, sales jumped 53 percent in 2010. Super Micro, founded in 1993, is among the smallest companies on our list, with a market cap of $429 million.
    SuperMicro
  15. No. 14 CGI Group
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    No. 14 CGI Group

    Country: Canada
    Market Value: $4.4 billion
    Sales: $3.6 billion

    Sales Growth: -2%
    Employee Growth: 19%
    Return on Investment: 177%
    Total Return: 18%

    The company was founded by Serge Godin, above. Now led by Michael E. Roach, CGI Group's (GIB/A:CN) growth this year has been driven by the $1.1 billion acquisition of Stanley, which focuses on the defense market. Smaller than better-known competitors that provide similar services, such as Accenture, CGI doesn't compete on price. "We are not willing to give up margin in order to grow the top line," says CGI spokesman Lorne Gorber. "Our investors are more long-term-focused. A dollar of margin is more attractive than a dollar of revenue."

    (Editor's note: This story has been updated. Serge Godin is the founder of CGI. The company is run by CEO Michael E. Roach.)
    Bloomberg
  16. No. 15 Atheros Communications
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    No. 15 Atheros Communications

    Country: U.S.
    Market Value: $1.9 billion
    Sales: $886 million

    Sales Growth: 95%
    Employee Growth: 21%
    Return on Investment: 13%
    Total Return: -1%

    The Wi-Fi chip maker had a good year in 2010, with strong demand for its chips in cell phones and other devices. The Santa Clara (Calif.)-based Atheros Communications (ATHR) acquired Opulan, a maker of passive optical networking (PON) chips, for $72 million on Aug. 31, which helped Atheros expand its offering for the networking market.
    Bloomberg
  17. No. 16 SMART Modular Technologies
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    No. 16 SMART Modular Technologies

    Country: U.S.
    Market Value: $471 million
    Sales: $703 million

    Sales Growth: 59%
    Employee Growth: 9%
    Return on Investment: 15%
    Total Return: 70%

    SMART Modular Technologies (SMOD) has been capitalizing on increasing demand for solid-state drives. The Newark (Calif.)-based company is working to diversify beyond specialty memory solutions by investing in the Brazilian flash market and moving into the solid-state storage for the enterprise market. This year, SMART announced an agreement with IBM (IBM) to provide the solid-state drives for an upcoming supercomputer.
    SMART
  18. No. 17 ASML Holding
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    No. 17 ASML Holding

    Country: Netherlands
    Market Value: $14.3 billion
    Sales: $4.8 billion

    Sales Growth: 136%
    Employee Growth: -4%
    Return on Investment: 25%
    Total Return: 16%

    Like other makers of semiconductor manufacturing equipment, ASML Holding (ASML:NA), which sells lithography systems, benefited from strong demand for its systems from chipmakers supplying companies with the components to build the consumer devices we'll buy this holiday season.
    Bloomberg
  19. No. 18 Tech Mahindra
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    No. 18 Tech Mahindra

    Country: India
    Market Value: $2.1 billion
    Sales: $1.1 billion

    Sales Growth: 14%
    Employee Growth: 34%
    Return on Investment: 24%
    Total Return: -19%

    This year, Tech Mahindra (TECHM:IN), an IT services and telecommunications company, topped $1 billion in sales. But the company—a joint venture between Mahindra & Mahindra and BT Group (Tech Mahindra is formerly Mahindra British Telecom)—saw total returns fall 19 percent thanks to an accounting charge taken against the acquisition of Satyam Computer Services in April 2009.

    Bloomberg
  20. No. 19 Accenture
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    No. 19 Accenture

    Country: Ireland
    Market Value: $32 billion
    Sales: $23 billion

    Sales Growth: 0%
    Employee Growth: 15%
    Return on Investment: 80%
    Total Return: 19%

    Accenture (ACN) likely received the most press over the last 12 months for dropping Tiger Woods from its ad campaign following a sex scandal involving the golfer. Woods was the face of the IT consulting firm while the new ad campaign, shown above, features an elephant that is not in a room. Hmmm?

    Bloomberg
  21. No. 20 Tata Consultancy Services
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    No. 20 Tata Consultancy Services

    Country: India
    Market Value: $42.2 billion
    Sales: $6.3 billion

    Sales Growth: 8%
    Employee Growth: 12%
    Return on Investment: 37%
    Total Return: 68%

    India's largest outsourcer, Mumbai-based Tata Consultancy Services (TCS:IN) saw North American revenue pass $1 billion in the fiscal second quarter ended Sept. 30. Led by CEO Natarajan Chandrasekaran, above, the company saw its stock price rise 68 percent on the rebound of financial services, a market segment that accounts for 44 percent of Tata's business.
    Bloomberg
  22. No. 21 ASM International
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    No. 21 ASM International

    Country: Netherlands
    Market Value: $1.3 billion
    Sales: $1.5 billion

    Sales Growth: 99%
    Employee Growth: 3%
    Return on Investment: 23%
    Total Return: 22%

    It has to be a good time to sell semiconductor manufacturing equipment when sales grow 99 percent and you're still not growing as fast as four other companies in your sector. ASM International (ASM:NA) did top rivals in one category: Its stock provided shareholders a 22 percent return last year.

    ASMI
  23. No. 22 Autonomy Corp.
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    No. 22 Autonomy Corp.

    Country: Britain
    Market Value: $5.2 billion
    Sales: $849 million

    Sales Growth: 28%
    Employee Growth: 35%
    Return on Investment: 12%
    Total Return: -15%

    In April, Autonomy (AU/:LN) raised $789 million to fund an acquisition. Then on Nov. 24, Autonomy announced that the "specific acquisition" it had been working on was put off due to "an additional opportunity that warrants further examination." Autonomy, led by founder, CEO, and director Michael Lynch, above, recently added a new health-care division and opened an office in Brazil.
    Bloomberg
  24. No. 23 Research in Motion
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    No. 23 Research in Motion

    Country: Canada
    Market Value: $25.5 billion
    Sales: $16.9 billion

    Sales Growth: 28%
    Employee Growth: 8%
    Return on Investment: 36%
    Total Return: -30%

    Research In Motion (RIMM), the creator of the ubiquitous BlackBerry, is playing catch-up to the Apple iPad. Mike Lazaridis, co-founder and co-CEO, above, unveiled the company's answer to the iPad on Sept. 27: the BlackBerry Playbook, due to launch early next year. Although the stock market has responded positively to the announcement—sending RIM's share price up 30 percent to $63 as of Dec. 6—it's too early to tell whether the tablet will be as popular, or addictive, as those "CrackBerries."
    Bloomberg
  25. No. 24 Simplo Technology
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    No. 24 Simplo Technology

    Country: Taiwan
    Market Value: $1.5 billion
    Sales: $1.2 billion

    Sales Growth: 14%
    Employee Growth: 32%
    Return on Investment: 24%
    Total Return: 16%

    No wonder Simplo Technology had a good year. It supplies the majority of the batteries Apple uses in the iPad. The Taiwanese company produces lithium ion batteries for laptop makers such as Dell (DELL) and is logging orders from Apple competitors to make batteries for other tablets. In coming years, the company plans to expand into the battery market for electric vehicles.
    Simplo
  26. No. 25 Elematec
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    No. 25 Elematec

    Country: Japan
    Market Value: $277 million
    Sales: $1.2 billion

    Sales Growth: 41%
    Employee Growth: 22%
    Return on Investment: 10%
    Total Return: 17%

    Elematec (2175:JP), the result of a merger in October 2009 of Takachiho Electric Co. and Ohnishi Denki Co., makes backlights, eyepiece censors, speaker nets, sensors, cooling fans, and other parts for cell phones, televisions, household appliances, cameras, and other electronic devices.
    Elematec