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HELEN HUNTLEYIn volatile economic times, even the biggest businesses in the Tampa Bay area scramble to hang onto their lofty positions.
Life at the top is apparently tough even if you're one of the Tampa Bay area's biggest businesses. Or perhaps especially if you're one of the Tampa Bay area's biggest businesses.
Since the St. Petersburg Times launched an annual review of public companies in 1995, there's been a virtual whirlwind of disappearing acts. Eight of the 15 largest companies on the 1995 list no longer exist as independent public companies. Thirty-three of the top 50 are gone. In fact, there are no longer 50 public companies headquartered in the Tampa Bay area that meet our minimum criteria for listing. That's why we concentrated our focus this time on the top 10.
For a glimpse of how difficult life has become, go right to the head of this year's Times 10 list of the top public companies, by revenue, headquartered in the Tampa Bay area.
At the top sits Tech Data Corp., the computer products distributor. It became the Tampa Bay area's largest company in 1996 when the former No. 1, Eckerd Corp., was bought by J.C. Penney Co. At the time, Tech Data boasted $4.6-billion in annual revenues. Last fiscal year, it had $15.7-billion, slightly more than the other nine companies on our list combined.
While Tech Data is undisputedly the Tampa Bay area's largest company, its recent performance is the worst of our group of 10. Its revenues have fallen the past two years, down from a peak of $20.4-billion. The company went from a $178-million profit to a $200-million loss. Its shareholders are smarting from their losses, too. Tech Data stock is worth about half what it was at its $54 peak in September 2000.
Tech Data's woes have nothing to do with its location in the bay area and everything to do with its position in the slumping tech industry. When people buy fewer computers from Tech Data's customers, who are retailers and other computer resellers, those customers buy less from Tech Data.
At least Tech Data remains very much a going concern, which is more than can be said of some of the other large public companies that have graced the local landscape.
Where did all those companies go? Some executives, like those at Kaydon Corp., packed their bags and their companies off to cooler climates. Others packed for bankruptcy court. Remember Sports & Recreation/Jumbo Sports? Some companies went private or slipped below the requirements for Nasdaq listing and faded into the netherworld of bulletin board trading. Many sold out, giving up their independent status for life as a subsidiary or division of some other company. Count Eckerd, Florida Progress Corp., Home Shopping Network and Kash n' Karry Food Stores as part of that group.
It's begun to look suspiciously like some TV producer might secretly be filming a business version of the reality show Survivor right here in our back yard.
Tech Data won its spot at the top of this year's list based on its total annual revenues. It also ranks very high, though not first, in shareholder equity, market value and number of employees. The company employs about 8,800 people, most of them in Europe, where the company now does more than half of its business. About 2,300 work in the Tampa Bay area.
"They're a very big company now, so it's difficult for them to buck the broader trends in the technology industry," said Robert Anastasi, a stock analyst who follows Tech Data as part of his job at Raymond James & Associates in St. Petersburg. "We're in a down period, and Tech Data is not immune to that."
So far there are no signs of a turnaround; in fact Tech Data just lowered its estimates for sales in the current quarter. However, Anastasi said Tech Data has done well under the circumstances. He said the company's location in the Tampa Bay area, where payroll and other costs tend to be low, is a plus:
"Their big competitor is a southern California-based company. I'd rather have a lot of my costs in Florida than in Los Angeles."
Tech Data is not alone in trying to swim upstream against industry and economic trends. All three of the largest companies in the Times 10 face serious business challenges.
The second-largest company on the Times list, Jabil Circuit Inc., is also a victim of the slowdown in technology spending. Jabil manufactures electronics for name-brand sellers of computers and other products. The company's sales have slumped along with those of its customers. Last year's revenues were down 18 percent from a peak of $4.3-billion, while profits were off 71 percent.
TECO Energy Inc., No. 3 on the list, actually can boast of growing profits and revenues, but its shareholders may be the most unhappy of any group in our top 10. Two years ago, the company's stock was trading for more than $30 a share. More recently, it has hovered just above $10 a share. On top of that, the company slashed its dividend from $1.42 to 76 cents a year. TECO is struggling under a heavy debt load from its losing gamble on out-of-state power plants. It is considering selling assets to raise cash.
But when you move further down the top 10 list, there are bright spots. Some of the bay area's largest public companies have managed to prosper and reward their shareholders in spite of tough economic times.
Leading the list based on the four performance measures we used were Lincare Holdings Inc., a Clearwater respiratory therapy services company, and Global Imaging Systems, a Tampa distributor of office equipment. Not far behind: Outback Steakhouse Inc., the Tampa restaurant chain.
All three showed strong revenue growth in their most recent fiscal years, along with double-digit profit growth and returns on equity. All three also had positive stock returns over the past two years, when most stock market investors lost money. Global Imaging's stock price more than doubled.
Yet success always raises a question: Can it be sustained?
Lincare, for example, has strong profit margins and is in a position to benefit from great demographics. As the baby boom generation ages, the number of people with respiratory disease, who are Lincare's potential customers, will continue to grow. However, the threat of tighter government purse strings always hangs over companies that, like Lincare, depend on Medicare reimbursement.
To keep their spots on our list, the Times 10 will have to hold off the advances of companies that didn't quite make the cut this time around. Some of them have been growing rapidly. Those next in line are Catalina Marketing Corp. of St. Petersburg and Kforce Inc, Tropical Sportswear International, Sykes Enterprises Inc. and Brown & Brown Inc., all of Tampa.
- Helen Huntley can be reached at huntley@sptimes.com or 727 893-8230.