Some American companies have done incredibly well this year. A number of them have posted extraordinary financial results for 2011. Others have launched products that revolutionized markets. (Of course, many big public corporations also did very poorly. Several nearly destroyed their business and dragged down shareholder value with it.)
To identify the best run companies in the U.S., specific factors were reviewed:
- Stock price
- Changes in earnings per share
- Major shifts in market share
- Changes in management, among other data
Once the initial screen was complete, product launch success, financial results, success of new management and the performance of each company within its industry was reviewed.
Incidentally, the "best run companies" list does not include a large number of corporations from any single industry.
These are the best run companies of 2011:
CEO name (tenure): Robert Iger (6 years)
YTD stock: down 2 percent
Latest quarter EPS: up 15 percent to $0.77
Insider ownership: 7.6 percent
Key event: ESPN reaches 100 million households
Disney has done well because it follows a key premise of successful management. It sticks to its knitting and improves the operating efficiencies of businesses it already knows. Disney has added a number of channels that carry the ESPN name, taking advantage of what is arguably the most well-known name in sports media. And while it is difficult for any brand to accomplish, let alone a multi-decade-old one, the company has actually managed to keep the Disney brand pristine.
Brand research firm Interbrand ranks Disney as the number nine most valuable brand in the world, with brand equity of $29 billion — only slightly behind Apple’s. This permits the company to market its growing list of theme parks, films and Disney store locations.
CEO name (tenure): John Mackey (21 years)
YTD stock: up 35 percent
Latest quarter EPS: up 32 percent to $0.50
Insider ownership: 12.0 percent
Key event: announced 1,000 store goal
Whole Foods was a niche food retailer for nearly two decades. Management recently decided to change that, and the company has embarked on plans that could easily double its size. Whole Foods has 316 stores in the U.S. and says it will take that number to 1,000 in the next few years.
It also plans further expansion into Canada and the UK. Wall St. has approved of the Whole Foods’ expansion plan for two reasons. The first is that the food chain is unusual in the industry because it has no debt. The second is that sales of organic foods have become attractive enough so that even big-box companies like Walmart and Target carry them.
CEO name (tenure): Howard Schulz (3 years, second tenure as CEO)
YTD Stock: up 36 percent
Latest Quarter EPS: Up 33 percent to $0.36
Insider ownership: 4.8 percent
Key Event: Opens 500th store in China
When Howard Schultz, Starbucks’s founder, returned to the helm of the company three years ago, it was in a shambles. It had expanded too quickly, particularly in the U.S., just as the economy hit a recession. Schultz retrenched, and then began to recreate the corporate image.
Among his most important decisions was to introduce the Via line of instant coffee, which allowed people to drink Starbucks coffee easily without going to stores. Additionally, Starbucks increased product distribution through other fast food outlets with its Seattle’s Best Coffee. Schultz also made simple changes to stores, which put baristas closer to customers. This became part of the original intimacy that allowed Starbucks to grow as a brand. Starbucks continues to diversify its risk beyond the store level. It recently bought Evolution Fresh as an attempt to move into the fresh juice market.
CEO name (tenure): Larry Ellison (34 years)
YTD stock: up 0.5 percent
Latest quarter EPS: up 33 percent to $0.36
Insider ownership: 23.2 percent
Key event: buy cloud company “RightNow”
The company Larry Ellison founded continues to dominate the global enterprise software industry despite challenges from IBM, HP, and Microsoft.
Oracle recently bought RightNow, a cloud computing company, after two other recent buyouts of ATG and Fatwire. Oracle is one of the few large American corporations that has been able to successfully buy that which it cannot build quickly. Oracle has nearly 50 percent of the global database market, which is considered critical to the sale of its servers and consulting products to large IT businesses and corporate IT departments.
CEO name (tenure): Steve Ballmer (11 years)
YTD stock: down 8 percent
Latest quarter EPS: up 10 percent to $.68
Insider ownership: 10.42 percent
Key event: buys VoIP giant Skype
Microsoft has been called the worst-run American company for several years because it has had little success in its attempts to diversity beyond the aging Windows products.
But in 2011, it began to break away from its reliance on those products with several launches and acquisitions. The most important of these was the buyout of worldwide VoIP leader Skype, which has 663 million registered users. The deal gives Microsoft a huge base to market Windows cloud-based products, Xbox and other entertainment products, as well as the company’s Bing search engine.
Microsoft also gripped the only chance available to gain a large stake in the mobile operating system business. It set a deal with the world’s largest handset company, Nokia, to ship Windows mobile software on most Nokia phones. Many analysts believe the partnership phones will come to the market too late. The same observation held true when Google launched Android to compete with Apple. Microsoft is taking smart risks again and has the balance sheet to back them. On December 7, to the delight of shareholders, the company announced it would be releasing Windows 8 in the second half of 2012.
CEO name (tenure): David Novak (11 years)
YTD stock: up 18 percent
Last quarter EPS: up 8 percent to $0.80
Insider ownership: 2.9 percent
Key event: buys Little Sheep Food chain in China
Many restaurant industry analysts say the future of fast food is in China. The U.S. has begun to overflow with locations as sales in Europe and Japan have slowed with the regional economies.
Yum! Brands has been working its way into China — its largest growth market — with the purchase of local fast food chain “Little Sheep Food.” Yum’s Kentucky Fried Chicken franchise is the world’s largest. When it released Q3 numbers, the company said it would open 600 new stores in China by year-end. Yum has balanced its portfolio of brands that includes Pizza Hut, Kentucky Fried Chicken, and Taco Bell. It does not rely on any single one of these brands exclusively as McDonald’s must. Together, Yum’s brands have 36,000 locations worldwide, which rival McDonald’s total distribution network.
(24/7 Wall St./The Blaze)