REVIEW 200/TOP 10 MULTINATIONAL COMPANIES
The First Signs Of Recovery
Many top multinationals saw results improve in 2003. Amid the
upswing, Microsoft kept its top position, and others posted big gains
By
Ben Dolven/SHANGHAI
Issue
cover-dated December 25, 2003 - January 01, 2004
How They Rated (charts):
* Microsoft
* Nokia
* Toyota Motor
* Intel
* Coca-Cola
* Sony
* IBM
* General Electric
* Nike
* Citigroup
1 MICROSOFT
Microsoft's main antitrust battle shifted from the United States to
Europe this year, but the software giant remains steady in the
REVIEW's rankings of the world's most admired companies. For the
ninth straight year, the software giant tops our list, as readers
ranked it No. 1 for long-term vision and No. 2 for financial
soundness and as a company others try to emulate. Evidence: Revenues
rose 13% to $32 billion in the year ended June 30, and operating
income increased 11% to $13 billion. As to the vision thing,
Microsoft pledged to invest a massive $6.8 billion in research and
development in the current fiscal year. It's gearing up for the
release of Longhorn, the next generation of the Windows operating
system, and promises to spend $750 million to build its position in
China by 2005.
2 NOKIA
For the second straight year, Finnish phone-making giant Nokia is second in our
rankings, and once again tops the list in innovation. The company will need
every bit of that innovation to combat narrowing margins in the core
mobile-phone business. Sales volumes have continued to grow--Nokia's global
hand-phone market share edged up to 39% by the end of September, from 36% a year
earlier. But with prices falling and the infrastructure business still in the
doldrums, Nokia is betting on all sorts of new initiatives, from next-generation
video and content to cameraphones, in order to stay ahead. It puts plenty of its
money to that use: The company spent $3.5 billion on research and development
last year.
3 TOYOTA
The world's third-largest car maker, Japan's Toyota Motor, is our top-rated
Asian multinational, edging up two slots to No. 3 this year. While the tech
giants ranked above it slog through the fallout of the computer and telecoms
crashes, Toyota has been rolling. It predicts $7.2 billion in net profits this
year, double the level of four years ago. The company now has a 10% share of the
global car market and 11% of the American market. Toyota is a pan-Asian giant:
It has assembly and production facilities in 12 Asian countries, including
Japan. While Japan's economy has struggled for nearly a decade and a half now,
Toyota is an exemplar of what Japan Inc. can achieve: Our readers give it
highest marks for long-term vision, where it ranks No. 3.
4 INTEL
Chip-making giant Intel is another big gainer this year, moving up three slots
in our rankings. The intense boom-bust of the chip cycle is one explanation.
Last year, with chip prices in the doldrums, the firm's ranking dropped. This
year, prices started to rise again and Intel is back as well. A sign of the
recovery: In the third quarter, Intel posted net profits double those of a year
earlier. Its massive R&D commitment helps: Intel is reaping big benefits
from the effort it put into developing Centrino chip packages--gear that powers
laptops with wireless connections, for which demand is soaring.
5 COCA-COLA
Coca-Cola dropped one notch to No. 5, but for the second straight year, its
marketing muscle led readers to rank it tops as the company others try to
emulate. It's a brand that may be the world's most recognized, and its fortunes
are a good measure of the economic health of the region. In Japan, a country
where Coke still makes huge profits but where growth is slowing, the company is
trying to keep its product mix up-to-date by adding new lines and new
vending-machine strategies. But Coke is sizzling in other markets: Strong sales
growth in several Asian countries, particularly China and Thailand, were solid
contributors to its overall year.
6 SONY
It's been a tough year for Sony, the world's leading gadget maker, which drops
three slots in our rankings to No. 6. The company has struggled to keep churning
out hit products at the massive rate it did during the 1990s, and earnings were
way down this year, with Sony turning a shocking $926 million loss in the
January-March quarter. It has returned to profitability, but at levels lower
than last year. But Sony is shooting to turn that around. It plans to reorganize
production operations to boost profit margins to 10% in 2006, from 2.5%
currently. And our readers certainly appreciate the company's innovations: It
was one of only three firms that ranked in the top 10 in four of our five
categories. Microsoft and Nokia were the others.
7 IBM
This isn't your parents' IBM--the stodgy, starched-collar Big Blue. The company
is moving ever further away from its mainframe-computer history, and our readers
rank it highly, particularly for having long-term vision. IBM continues to beef
up its services businesses, where it expects 60% of the technology industry's
profits to come from in the years ahead. Last year, it bought
PricewaterhouseCoopers Consulting and Rational Software Corp., both moves aimed
at expanding its services business. And among the world's tech giants, it's
probably the furthest along in adopting the open-source Linux programming
language.
8 GENERAL ELECTRIC
GE is now two years into the Jeff Immelt era and our readers figure the
sprawling conglomerate is in good hands. The company jumps back into the top 10
after dropping out last year, and readers rank it second only to Microsoft as a
company whose management has long-term vision. As befits a group with business
lines ranging from gas turbines to finance to entertainment, the year brought a
range of news: In China, for instance, GE won enormous orders for turbines on
the east-west gas pipeline and for jet engines to power the country's new
commercial-jet project.
9 NIKE
The Nike marketing machine continued to race along this year, and our readers
kept the company in the No. 9 slot. Here's one broad-based measure of the global
economic recovery: In the June-August period, Nike's quarterly revenues topped
$3 billion for the first time ever, up 8% on an adjusted basis from the year
earlier. Here's another: Nike set a record by paying a whopping $90 million
endorsement deal to LeBron James, an American high-school basketball star,
before he'd played a single game professionally. It lost out, however, to
Reebok, which took Chinese star Yao Ming's endorsement in October.
10 CITIGROUP
It was a year of change for the world's widest-ranging financial group, most
notably the ascension of Charles Prince to replace Sandy Weill as chief
executive in July. Citigroup agreed to pay $400 million to settle charges
brought by New York officials related to interactions between investment bankers
and analysts during the telecoms boom. But business results bounced back with
the American recovery, and the company jumped back into our top 10, up six slots
from last year. In Asia, its Citibank unit tenaciously built its base in China
with aggressive credit-card promotions.
