The ups, downs and outs of Times 50
Tech company Digital Lightwave and banking leviathan Citigroup are tops this year, and there are plenty of other changes. Maritrans Inc. and Utek Corp. make their first appearance on the list, and Danka and Checkers are among those companies that made it back onto the list. But the picture wasn't rosy for everyone.
By HELEN HUNTLEY, Times Staff Writer
© St. Petersburg Times,
published June 3, 2001
Banking behemoth Citigroup and technology upstart Digital Lightwave make an unlikely pair. Citigroup, with $119-billion in revenues and 230,000 employees, is literally a thousand times Digital Lightwave's size.
But the two companies have one important thing in common: Shining financial performance put them atop the Times 50.
Digital Lightwave Inc. ranks as the best-performing public company based in the Tampa Bay area. Citigroup Inc. is the best of the large Tampa Bay area employers based elsewhere.
The two companies earned their spots as a result of their profitability last fiscal year and their two-year return to shareholders. And the performance was no fluke: Both companies were the runners-up in their categories on the list published last year.
How did they do it?
Digital Lightwave delivers products that serve a narrow but blossoming niche: making equipment used to monitor and manage fiber optic networks, which provide high-speed transmission of voice and data.
That focus gives the company a competitive advantage, said Theodore Moreau, an analyst who follows Digital Lightwave for Robert W. Baird & Co. in Milwaukee.
"There's no one else that exclusively focuses on the optical networking space," he said. "They typically come out with higher-level products ahead of the competition, and the new products have higher average selling prices than those in place a year ago."
Digital Lightwave has managed to keep growing while many other tech companies have had to slam on the brakes as customers cut back their spending.
"While there is a lot of optical fiber capacity that has been laid, it hasn't all been put into usable form," Moreau said. As traffic grows on fiber optic networks, the companies that own them can use Digital's equipment to put dormant lines into action.
New fiber is being installed, too, both internationally and within U.S. cities, where Moreau said the growth potential is great because fewer than 3 percent of all U.S. commercial buildings have a fiber optic connection.
But analysts are not expecting a repeat of last year, when Digital Lightwave's profits jumped 534 percent as its revenues doubled.
The performance of the company's stock has been even more mind-boggling, not to mention stomach-churning. In 1999, the stock price jumped from $2.31 to $64 a share. Propelled by investor exuberance, it climbed to $139 in March 2000, then plunged to $31.69 in last year's Nasdaq bloodbath. This year, things got worse for Digital Lightwave and the tech sector; the stock bottomed out at $12.81 a share in April. Then came a dramatic bounce after the company beat analysts' estimates for the first quarter, followed by a sell-off last week. It closed Friday at $45.38, down $1.20.
Citigroup's diversification strategy contrasts sharply with Digital's narrow focus. As the largest U.S. banking institution, with $945-billion in assets, it casts a broad net over the financial services arena. Instead of specializing, it offers a range of banking and corporate finance services, investments, insurance, traveler's checks and other products.
Citigroup is the world's largest credit card issuer, a position solidified by its acquisition in 1998 of AT&T's $15-billion credit card portfolio. The company has operations in 102 countries, with about 20 percent of its income from emerging markets. Recently, it announced plans to acquire Banacci, one of Mexico's largest banks.
Last year, the company's profits were up 20 percent on an 18 percent increase in revenues. Analysts say Citigroup has yet to take advantage of all the potential cross-marketing opportunities it has through its many business units.
While Citigroup's headquarters is in New York, it is a major employer in Florida, with about 3,500 workers in the Tampa Bay area and another 8,000 in other parts of the state. The largest concentration of Tampa Bay employees is in the Sabal Park area of Tampa, where Citigroup employs about 3,000 people. They handle jobs such as processing traveler's checks and money orders and monitoring expense accounts and financial controls for Citigroup worldwide.
"We have our auditors here, our purchasing department here and a lot of information systems people here," said George Seegers, president and chief operating officer for Citigroup in Tampa. The office also handles customer service for some of Citigroup's Latin American operations, but Seegers notes that "it's more than a call center." He said about 40 percent of the Sabal Park employees are managers.
Citigroup's bay area work force also includes workers at the brokerage firm Salomon Smith Barney, insurance units Travelers, First Floridian and Primerica and the Clearwater office of recently acquired Geneva Cos., which specializes in valuing and selling small and medium-size companies.
Like Digital, Citigroup has rewarded investors who bought at the right time. The stock returned 70 percent in 1999 and 24 percent last year. It closed Friday at $51.80, up 55 cents.
The Times 50 represents a snapshot in time. These results are for the fiscal year ending in 2000, or, in a few cases, in January 2001. As a result, they capture more of the economic boom the nation enjoyed through 1999 and most of 2000 than they do the ensuing slowdown, which began in earnest in the fourth quarter last year.
Two-thirds of the 50 companies had double-digit or better revenue gains, and profit growth was stronger.
The return to investors was more elusive. Sixteen of the 50 companies posted negative returns for the period examined, April 30, 1999, to April 30, 2001. The time frame includes the bear market that began in March 2000 and turned brutal in September. The situation didn't really start improving until April.
No industry dominates the Times 50 list, but if banking, insurance and money management were lumped together, the field of financial services had the strongest showing. In addition to six bank holding companies, the Times 50 includes two giant insurance companies, a mutual fund company, a stock brokerage firm and a consumer finance company.
Technology-related companies turned in a strong performance among bay area-based companies, even though last year's top company, Jabil Circuit Inc., fell a few notches to fourth place.
Jabil has been the top company on the list for three of the five years that the Times 50 has used performance-based rankings. The company still is the leader in market value among Tampa Bay area-based companies, but it has suffered because of problems at some of its largest customers, such as Cisco Systems Inc. The company laid off some employees in March but repeatedly declined to say how many and has since refused to discuss its bay area employment.
This year's Tampa Bay area-based leaders, in addition to Digital Lightwave, were TECO Energy Inc. and Tech Data Corp. They are an old economy-new economy pair, but both companies have succeeded by adapting to the changing business environment.
Tech Data, which is the largest Tampa Bay-based company, with more than $20-billion in revenues, is moving into consulting to make itself more valuable to its clients. TECO Energy has gotten into independent power generation, building non-regulated power plants to sell electricity outside TECO's home territory.
"The market sees a lot of growth opportunity in those plants," said Timothy Winter, an analyst who follows TECO for A.G. Edwards & Sons Inc. in St. Louis. "They've moved up from being a traditional utility into the energy merchant group."
The list of Tampa Bay area companies include two that are making their first appearance on the Times 50: Maritrans Inc., a marine transportation company that moved its headquarters to Tampa last year, and Utek Corp., a small technology licensing company in Plant City that went public last fall.
Five Tampa Bay-based companies made their way back onto the Times 50 list this year after a hiatus because of poor performance. Perhaps the most notable: Danka Business Systems PLC, which returned to profitability after a $295-million loss but is still in a struggle for long-term survival. Checkers Drive-In Restaurants Inc. also made a strong comeback after posting a $26-million loss for 1999.
Of course, not every bay area company was on the upswing last year. Big losses kept a lot of companies off the latest list, including Walter Industries Inc., Z-Tel Technologies and PlanVista Corp., which changed its name from HealthPlan Services Corp. after losing $64-million.
Most changes in the rankings of companies based elsewhere occurred because the list of companies considered for ranking was expanded this year.
Times 50 story lineup