Where Are They Now?

Many of last year's leading lights have gone missing. Blame tougher competition and undeniable strategic missteps


The summer sun may be bright over Finland, but these are gloomy days at Nokia Corp. (NOK ). The world's largest mobile-phone maker in April announced revenues dropped 2% in the first quarter. That shook investors, who have slashed 38% off its share price since an early March high. Helsinki-based Nokia focused too much on cheap models and on top-of-the-line smart phones for wealthy business users, while competitors exploited the vast middle market. Those factors conspired to knock Nokia off the Info Tech 100 for the first time since the yearly list made its debut in 1998.


Last year, interActiveCorp (IACI ) went on an acquisition binge. The e-commerce conglomerate bought online travel agency Expedia (IACI ), Hotels.com (IACI ), LendingTree (IACI ), and Ticketmaster (IACI ). Now it's dealing with a massive hangover. Earnings have been clobbered by noncash expenses related to the acquisitions. That contributed to an 18% stock slide over the past year, a sharp contrast to the 34% return that helped InterActiveCorp rank No. 33 last year.


Amazon.com Inc. (AMZN ). missed the ranking? Isn't the company thriving? Well, yes: The leading e-tailer has posted three straight profitable quarters. Sales for the past year jumped 37%, to $5.7 billion. So why did Amazon drop off the Top 100 list? Blame the $2.9 billion in losses it has racked up since starting up in 1994. Because Amazon has negative shareholders' equity, it didn't get credit for its recent profits and slipped from No. 46 last year.


Telecom giant Verizon Communications Inc. (VZ ), ranked No. 31 last year, is facing an onslaught of competition from cable-TV operators, AT&T (T ), and Web phone upstarts like Vonage Holdings Corp. Hello, trouble: Revenues rose a measly 1% over the past 12 months, and the company's stock slid 5%. Verizon reduced its staff by 21,000 in December, 2003. That led to more than $3 billion in severance and pension costs.


Many companies would be happy to match Intuit Inc.'s (INTU ) growth: Sales were up 15% last year. Yet Wall Street is worried about the tax and small-business software giant's long-term growth after it announced in May that sales growth in the next fiscal year, beginning Aug. 1, will dip below 10%. Its stock slid 14%, compared with the 5% gain that helped it become No. 99 on last year's IT 100.

AT&T Wireless

AT&T Wireless Services Inc. (AWE ) made headlines this winter when rival Cingular Wireless LLC agreed to acquire it for $41 billion. But the pricey deal, which is expected to be completed later this year, obscured operating problems. Revenues for the year ended Mar. 31 grew only 5%, well off the 14% from last year. And AT&T lost 367,000 subscribers in the first quarter even as its top rivals grew. What's behind the troubles? Mediocre customer service and a rocky transition to new digital network technology.

Seagate Technology

In 2000, Seagate Technology (STX ) went private in the biggest leveraged buyout in tech history. After rivals IBM (IBM ) and Quantum (DSS ) left the disk-drive business, Seagate went public again in December, 2002, and ranked 14th on last year's IT 100. But as the PC market bounced back, a price war broke out with rivals, including Maxtor Corp. (MXO ) and Western Digital Corp. In May, Seagate announced a 14% drop in quarterly sales and an 8.6% decline in profit.


In Taiwan, where tech companies often survive on razor-thin margins, it doesn't take much to turn yesterday's star into today's flameout. Elitegroup Computer Systems last year ranked No. 50 on the IT 100, thanks in part to low-cost production in China. This year -- gone. Why? Rivals like Hon Hai Precision Co. boosted their presence in China to take away Elitegroup's cost advantage. The result: Sales tumbled 72% in the first quarter.

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