Annual report on the SF Bay region's 200 largest public companies reflects an economy in expansion mode

Chron 200
On an upswing
Four years and growing: Bay Area's largest public companies show continuing growth of about 10%, often a result of innovative technology and business strategies
Carolyn Said, Chronicle Staff Writer

Monday, April 9, 2007


Life was good for the majority of Bay Area companies in 2006.

The Chronicle's annual report on the region's 200 largest public companies reflects an economy in expansion mode. Local enterprises posted solid gains -- hovering around the 10 percent mark -- in revenue and profit, while market capitalization grew 7.1 percent during the year. It was the fourth year in a row that The Chronicle 200 shows companies on the upswing, although the growth was not as spectacular as in recent years.

The region "is going at close to full throttle now," said Jim Wunderman, chief executive officer of the Bay Area Council, which represents 275 local companies.

This year's Chronicle 200 report goes in-depth with some front-runner companies to analyze the secrets of their success.

The profiled companies include famous names -- Chevron, Google, Hewlett-Packard and Charles Schwab. We found that no matter how acclaimed those companies are, they continue to break new ground in industry innovation, rather than resting on their past successes. That underscores one of the Bay Area's strengths: Not only are local companies inventive in their products, they are also trailblazers when it comes to business strategies and management tactics.

Chevron is doing the balancing act of capitalizing on current sky-high prices for crude oil while thinking decades ahead as it invests in research and exploration for petroleum sources. Google, despite being the 800-pound gorilla of the Internet, is pursuing cooperation as much as competition by teaming up with erstwhile rivals. Cisco, which already owns the world of Internet plumbing, is making bold forays into homes and Internet devices.

Some companies engineered comebacks: HP wrested the No. 1 PC spot back from Dell Inc., while Charles Schwab Corp. reconnected with its core market of individual investors.

Then there are little-known companies that could be the market leaders of tomorrow. Solar-power specialist SunPower Corp. -- one of 19 entrants to the list -- symbolizes the emergence of clean technology as a whole new direction for Silicon Valley. It also had the biggest sales gain by percent of any Chronicle 200 company, with revenue of $236.5 million, up 200.4 percent from the previous year.

The overall Chronicle 200 results reflect a Bay Area economy that is experiencing moderate growth.

"Steady, not stellar" describes the 2006 corporate economy, said Anne Wenzel, principal economist at Econosystems, a Menlo Park economics and market research firm.

Nearing the trillion-dollar sales mark, the 200 companies racked up $909 billion in revenue during 2006, up $77.2 billion, or 9.28 percent, from 2005, according to data culled from corporate financial reports analyzed by FactSet Research Systems. That result lagged 2005's 13.2 percent sales increase and 2004's 15.7 percent rise. Profit rose a respectable 10.3 percent to $75.45 billion from $68.4 billion in the previous year. That outpaced last year, when profit rose 3.2 percent -- but the weaker 2005 showing was due to 2004's outstanding performance, when the 200 companies more than doubled their profit.

Wall Street had a moderate response to the companies as a whole. Although some firms saw their stock price skyrocket, collectively, the companies closely paralleled market performance. The collective market capitalization of the 200 companies as of our March 30 cutoff date was $1.815 trillion, up 6.76 percent from $1.7 trillion in 2005.

If The Chronicle 200 were treated as a stock index -- with companies' stock prices weighted for their size -- it would have risen 8.64 percent between March 31, 2006, and March 30, 2007. That puts it in line with the Standard & Poor's 500 index, which was up 9.73 percent for the same period; the Dow Jones industrial average, which grew 11.2 percent; and the Nasdaq, which was up 3.49 percent.

A number of companies, especially those at the top of the list, had particularly outstanding years.

Chevron Corp. landed a trifecta as the Bay Area leader in sales, profit and market capitalization. It already had been No. 1 in sales and profit for several years, but a 23.9 percent boost in its value on Wall Street was enough to shoot it past previous market-cap leader Cisco Systems Inc. (which had a 15.9 percent stock rise). Chevron also had the biggest sales gain measured in dollars, boosting its revenue by $11.9 billion.

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