1. APPLE COMPUTER
iPowerhouse
Last year: 3
As the world moves toward open standards, the last true believer in closed systems refuses to capitulate. Funny thing: No one is asking Apple to change. That's because the computermaker turned consumer electronics powerhouse has made a virtue of proprietary control, consistently delivering quality and flair. The company sold 8.2 million iPods in 2004, and iTunes accounted for 70 percent of legal music downloads, leading to exceptional revenue and profit in Q4. With such a foothold in music, can an assault on TV be far behind?
Challenge: Woo enterprise users who still dismiss the Valley darling. As a Dell spokesperson scoffs, "Is it innovation if no one buys it?"
Opportunity: Build on the iPod/iTunes strategy. How about an Apple video camera that adds value to Final Cut Pro?
2. GOOGLE
The Answer
Last year: 1
The Internet's librarian turns out to be its biggest power broker. Fueled by $3.2 billion in 2004 revenue, Google fulfills 200 million searches of 8 billion Web pages a day, determining which sites are seen and which remain buried. And new initiatives keep coming: local search, maps, movie showtimes, searchable television content. A recent post on Slashdot.org puts it neatly: "In a few years, you'll be driving your Google to the Google to buy some Google for your Google."
Challenge: Retain valuable employees. Now that the fortunes have been made, workers may have little incentive to stay.
Opportunity: Wrest screen real estate from Microsoft. Desktop search is just the thing to capture the first parcel.
3. SAMSUNG ELECTRONICS
Gadget Master
Last year: 6
If China is the number one Asian threat to the US consumer electronics industry, number two is the republic of Samsung. The South Korean company racked up profits of $10.8 billion in 2004, more than Sony, Matsushita, Motorola, and Nokia combined. It leads in flash memory and computer displays and ranks third in cell phones. With 15 R&D centers around the globe and the perfect test market in its backyard, Samsung gives even the cut-rate Chinese reason to tremble.
Challenge: Currency exchange rates. The falling dollar is bound to crimp the company's earnings.
Opportunity: Be the new Sony. The tech and products are there; the image still needs work. Time for an all-out branding offensive. (For more on Samsung, see page 126.)
4. AMAZON.COM
Mall World
Last year: 2
Jeff Bezos is finding that it pays to gamble. Not long ago he bet that customers would come to Amazon for more than books; last Thanksgiving weekend, his company sold more electronics items than books for the first time. Now Amazon's CEO is wagering beyond ecommerce. In September, Bezos rolled out a search engine, A9.com, that offers recommendations: "If you liked that site, you'll love this one." That's more than a shopping service; it's an assault on Google and Microsoft.
Challenge: Show us the money. Bezos has proven his bookshop can grow, but profits have been paltry.
Opportunity: Partner with Netflix - or crush it. Amazon could very well do either: It owns the Internet Movie Database, and it's piloting DVD rentals in the UK.
5. YAHOO!
Next Stop: Hollywood
Last year: 7
Fastest revenue growth: 119%
Ten years after two Stanford engineering students undertook a quixotic effort to categorize every page on the Web, Yahoo! is set to storm Hollywood. It has revenue: $3.6 billion in 2004. It has eyeballs: 345 million pairs every month. It has broadband partnerships with reality TV kingpin Mark Burnett and Entertainment Tonight. CEO Terry Semel has hired ABC exec Lloyd Braun, the guy who green-lighted Desperate Housewives, to cook up compelling shows. Can he direct Yahoo! to Wisteria Lane?
Challenge: Keep at least one eyeball on Google. Yahoo! is still an ad-driven Web portal at heart.
Opportunity: Create content. Yahoo!'s numbers make TV's sweeps-week audience look tiny.
6. ELECTRONIC ARTS
Game MVP
Last year: 8
The videogame industry has grown up. The first generation of gamers is over 30 and can afford every new release. At the same time, developers wield the upper hand in negotiations with movie studios, record companies, and sports leagues. The uppermost hand of all: Electronic Arts, with 27 platinum titles in 2004. Despite Harry Potter and The Lord of the Rings, sports are still EA's strength. In December, the company announced an exclusive five-year deal with the NFL, sending competitors to ride the pine.
Challenge: Show Hollywood who's boss. EA makes great games out of movies. When do we get a great movie made out of a game?
Opportunity: Steal Grand Theft Auto's thunder. The deal to turn The Godfather into a game gives EA entrée into the "mature" genre.
7. GENENTECH
Forever Young
Last year: 4
It's as if the Knack were still on the charts. Genentech, founded in 1976, has dodged biotech's one-hit-wonder syndrome. It now has 13 discoveries on the market, thanks to the FDA's November approval of the lung cancer treatment Tarceva. Avastin, for colon cancer, notched $555 million in sales last year, but could reach several billion annually if it's approved for ovarian and lung cancers as well.
Challenge: Intellectual property loopholes. India's Zenotech Labs has announced a knockoff of Genentech's lymphoma-fighting Rituxan for one-third the price.
Opportunity: Make traditional chemo obsolete. Avastin is a start.
8. TOYOTA
Hot Wheels
Last year: 18
Highest Capital Spending: $15 billion
What car won Consumer Reports' most recent customer satisfaction survey? The Prius. Toyota's hybrid model is taking over the road, boosting fuel efficiency to 60 mpg and taunting US automakers to catch up. The only roadblock is cost, but there's good reason to believe Toyota can get past it. Anticipating sales of 100,000 hybrid vehicles in 2005, the company is doubling production, and third parties like Toshiba and Panasonic are ramping up assembly lines to supply parts. Economies of scale are dead ahead.
Challenge: Style. Nobody buys a Prius because they love the design.
Opportunity: Sell to companies with huge, gas-guzzling fleets. FedEx and UPS could save a bundle by going hybrid.
9. INFOSYS TECHNOLOGIES
Outsourcerer
Last year: 11
The caricature of the Indian outsourcing industry as a voracious monster bent on devouring US jobs isn't just oversimplified, it's obsolete. Case in point: Infosys. The Indian coding shop, which garnered $1.1 billion in sales last year, is hiring 500 employees for Infosys Consulting, a $20 million foray into high-end IT advice based in - guess again - Fremont, California. Dirt-cheap outsourcing plus strategic guidance makes for a powerful combination - and one that moves jobs back to the US.
Challenge: Beware the rest of Asia. In the low-cost sweepstakes, China is to India as India is to Western economies.
Opportunity: Do to bloated US consultancies what Dell did to the PC industry.
10. EBAY
The Buyer's Seller's Market
Last year: 5
Once the world's biggest yard sale, eBay has become the epitome of ecommerce: a global marketplace responsible last year for $34.2 billion worth of auctions and fixed-price sales. With no inventory costs, eBay generates net margins of 24 percent. Meanwhile, the company's PayPal division is becoming the standard for online payments. With 56 million active users, eBay has a big say in what gets sold online and how we pay for it.
Challenge: Stop taking sellers for granted. After recent fee increases, 7,000 eBay stores closed.
Opportunity: China. EBay must do better there than it did in Japan, where it got spanked by Yahoo! in 2001 and beat a retreat.
11. SAP
Owns the Enterprise Zone
Last year: 14
Larry Ellison so fears SAP that he bought PeopleSoft. Bill Gates once tried to buy SAP itself. What are they afraid of? The German software house gives its 26,000-plus corporate customers a way to integrate the various apps that run large-scale enterprises, from inventory to payroll to shipping. And unlike Oracle and Microsoft, SAP's sales pitch doesn't push customers to buy a particular OS or database.
Challenge: Market saturation. Large companies already have enterprise software, forcing SAP to set its sights on smaller operations.
Opportunity: Steal away legions of PeopleSoft customers dissatisfied with the way Oracle has managed the product.
12. PIXAR
Simply Incredible
Last year: 9
Biggest Profit Margin: 51.8%
Why didn't anyone tell Hollywood it was so easy? Release just six movies in a decade and your studio will be worth more than $5 billion. OK, it's not as easy as Pixar makes it look. The digital animator made CG de rigueur in feature-length cartoons, forcing Disney to shutter its traditionalstudio. Pixar's latest opus, The Incredibles, grossed $260 million at the box office, and hopes are high for next summer's Cars. You won't find a more perfect marriage of art, tech, and commerce.
Challenge: Keep it up. Even superheroes stumble once in a while.
Opportunity: Redefine the relationship between creatives and suits. When Pixar's coproduction deal with Disney expires in 2006, the artists will be calling the shots.
13. CISCO
The Network Connection
Last year: 10
Tech companies rarely age gracefully, but Cisco is embracing middle age more like George Clooney than Mickey Rourke. Increasingly, the network finally is the computer, making the hub-and-router manufacturer more relevant than ever. CEO John Chambers insists double-digit growth can continue even as the company's core markets mature. He's using his $16.5 billion war chest to fund both internal R&D and shrewd acquisitions like wireless LAN specialist Airespace. The goal: an adaptive, self-defending network.
Challenge: Convince corporate customers their phones are safe with Cisco. The company clawed back a portion of Merrill Lynch's phone business it had lost to Avaya, but its cred as a voice-over-IP provider remains weak.
Opportunity: Thaw the chill on Wall Street. Step one: Expense options and distribute dividends, thus proving that Cisco is finally past bubble-era thinking.
14. IBM
Ware in the World
Last year: 13
IBM has proven surprisingly dexterous not only in entering markets but in exiting them as well. CEO Sam Palmisano's decision to sell the PC division to discount computer mandarin Lenovo is the latest example of IBM's ability to move on after a product has played out; he did the same with disk drives and memory chips. Meanwhile, the company's early embrace of RFID shows it's not afraid to place bold new bets.
Challenge: Salvage the company's $10 billion utility-processing initiative by persuading customers to rent processing power online rather than buying it outright.
Opportunity: Reinvent the PC. The 256-gigaflop Cell chip that IBM is developing with Toshiba and Sony promises to turn the next-gen PlayStation into a $200 media center. Look out, Lenovo.
15. NETFLIX
Blockbuster Buster
Last year: 16
Is there a happy ending? In 1999, upstart Netflix disrupted the movie-rental industry by lending DVDs by mail for a flat monthly fee. Now it's a favorite death-pool candidate, thanks to competition from Blockbuster and Wal-Mart. CEO Reed Hastings has responded by dropping the monthly price, and it seems to be working: Netflix had 2.6 million subscribers as of year-end 2004 and in the fourth quarter enjoyed its lowest churn ever. But watch out for Amazon.com!
Challenge: Pricing. Netflix is trying to hold the line at $17.99 a month, while Blockbuster charges $14.99. Now that's a test of customer loyalty.
Opportunity: Video-on-demand. Netflix and TiVo could have digital delivery wrapped up, but if they lose first-mover advantage, they're toast.
16. DELL
Cost Cutter
Last year: 12
The real reason Carly Fiorina was ousted from Hewlett-Packard: She couldn't compete with Dell's low-cost, direct-sales model. Now the Texas discounter has its sights set on consumer electronics. But unlike PC shoppers, TV buyers like to see screens before they order one - so Dell is installing kiosks in shopping malls. Cheapskates need not worry that they'll end up paying the extra marketing expense. Dell's 42-inch plasma sells for $3,500 - half the price of a comparable Sony.
Challenge: Focus on frills. Lenovo chased Dell out of China's market for stripped-down, dirt-cheap PCs. How will Dell fare when it's not the cheapest option?
Opportunity: Marry low cost and high style. Dell's pricing prowess makes it a perfect match with Apple: $100 iPod photo, anyone?
17. GENERAL ELECTRIC
Vast Is Beautiful
New
Top Market Cap: $382 billion
GE isn't one company, it's many - a global megaconglomerate whose 11 divisions span finance, health care, energy, nanotech, and, entertainment. When CEO Jeffrey Immelt took over in 2001, the company faced a future of slowing growth and narrowing margins. Immelt shed $15 billion in unproductive assets, spent $61 billion on acquisitions, and spurred a renaissance of innovation that yielded 14 percent growth in 2004 - plus ultra-high-speed CAT scans and self-assembling nanomaterials. Who said small is beautiful?
Challenge: Establish scrupulous financial reporting. It's taken a lot of internal restructuring to make GE's finances transparent. Immelt needs to keep them from clouding over.
Opportunity: Win a Nobel Prize. With its unparalleled finances and renewed focus on innovation, no US corporation is in a better position to revive the glory days of American science.
18. MEDTRONIC
Bionic Business
New
The Six Million Dollar Man was overpriced. Slap in a Medtronic implantable heart monitor, Parkinson's-busting neural stimulator, spinal fixator, and blood-sugar sensor, and you're probably under a million, all-in. Headquartered in Minneapolis, Medtronic is at the forefront of extending human physiology through technology, with sidelines in image-guided surgery systems, defibrillators, and the like. A heady 18 percent growth rate led to 2004 sales approaching $10 billion, of which nearly 22 percent was profit. The posthuman gold rush is on.
Challenge: Get back to being the first responder. Medtronic ceded that position behind competitors Boston Scientific and Johnson & Johnson in developing drug-coated stents used to prop open arteries.
Opportunity: Get people hooked up to the Internet - literally. A national health information network that gathers real-time data from devices in patients' bodies could change medicine forever.
19. INTEL
Processor Central
Last year: 24
Overwhelming market share - 82 percent in desktop microprocessors - won't be enough to keep Intel on top. As the PC era gives way to a proliferation of portable devices, the company is scrambling to reinvent itself. In January, president and soon-to-be CEO Paul Otellini declared a new focus: the mobile marketplace. He reorganized the company and diverted a portion of the company's $4.8 billion R&D budget into chips for cell phones, MP3 players, and PDAs. Look for Intel inside your palmtop.
Challenge: Take on Samsung, which not only excels in cell phone chips but maintains a firm grip on Asian suppliers.
Opportunity: Extend the product line. Otellini, who will be Intel's first nonengineer head honcho, plans to move into chipsets, software, and development tools.
20. SALESFORCE.COM
Software as Service
New
There was a moment circa 1999 when everyone loved the idea of delivering productivity software as a Web-based service. Then they moved on to the next fad. But Salesforce.com CEO Marc Benioff stuck to his guns, and today his company helps 13,900 corporate clients manage their customer relations; last year, it brought in $176 million. By eliminating the time and expense of installation, Salesforce.com gains a huge advantage: The company released 17 revisions of its software in the same time Microsoft turned around only two versions of its SQL server.
Challenge: India! If Salesforce.com slows down, it could be steamrolled by an outsourcer.
Opportunity: OK, Benioff - you were right. Now sell the company to IBM.
21. VODAFONE
Global Mobile
Last year: 19
It's showtime. After allocating billions to infrastructure investments, customer acquisition, and price wars, Vodafone rolled out 3G services in 13 countries late last year. Now the European carrier, which ranks second globally in subscribers to China Mobile, will find out whether its 152 million customers really want to play music, videos, and games on their handsets. With 500,000 songs and premier partners such as Warner Music, Sony BMG, Electronic Arts, and Fox, Vodafone is ready for the download deluge.
Challenge: Capture Asia. Reports from Japan - one of the most advanced 3G markets - have Vodafone performing so badly that it might unload its Tokyo division.
Opportunity: Sell business users on 3G. They could attend videoconferences while riding the bullet train - or sailing the Caribbean.
22. FLEXTRONICS
Building Your Brand
Last year: 20
Among outsourcers, Flextronics has hit the trifecta: top-tier customers, low-cost operations, and a foothold in a variety of industries. The company manufactures electronics for brand names like Cisco, Dell, Motorola, Nokia, and Sony-Ericsson out of six industrial parks in the developing world. Last year, Flextronics bought the Agilent division that makes cell phone camera modules, and in January it inked a deal to build Nortel's phones. With $15 billion in annual sales, who needs a brand?
Challenge: Gauge demand accurately. In 2001, Flextronics got caught with excess capacity and had to ax 27,000 employees.
Opportunity: Push the higher-margin design business. Clients are biting: Handsets codeveloped with Microsoft are on the way.
23. EMC
Bit-Deposit Box
Last year: 25
Data storage leader EMC revitalized its flagging business by shifting focus from big-ticket hard disk arrays to hardware-agnostic software. Competitors have followed suit, so now the company is focusing on a concept called information life cycle management. The gist: The value of data changes over time. A cost-effective storage strategy is to channel mission-critical data to the fastest, most secure hardware, then retire it to a lower-cost system as its value falls. Meanwhile, a string of acquisitions is keeping EMC's own value high.
Challenge: Fight an ever-intensifying war on two fronts: software (against the Veritas-Symantec alliance) and hardware (IBM and Hitachi).
Opportunity: Distributed enterprises. EMC cracked small and medium-size businesses by partnering with Dell. Now it hopes an alliance with Cisco will repeat the trick with far-flung businesses looking to consolidate their data.
24. NVIDIA
The Third Dimension
Last year: 22
Nvidia's crappy 2003 would have killed a lesser company. The graphics specialist's new chip fell behind schedule and ultimately turned in a sluggish performance. Then Microsoft gave Nvidia's coveted Xbox slot to rival ATI. Stunned, CEO Jen-Hsun Huang retooled Nvidia's design and manufacturing pipeline. The results were on display in 2004: the popular NV40 chip - a high-performance graphics monster - and a place in Sony's PlayStation 3.
Challenge: Gain market share. Nvidia forecasts a 15-point share increase in notebooks in 2005.
Opportunity: Replicate the "Intel inside" effect, so consumers demand Nvidia chips in their devices. Savvy marketing could do the trick.
25. JETBLUE
Sky's the Limit
New
Five years ago, JetBlue started with one flight a day between New York City and Fort Lauderdale, Florida. Now it makes 280 jaunts to 30 cities daily. The key to success? A focus on efficiency and service. Sure, rival Southwest is more profitable, but JetBlue slashes fares without sacrificing luxuries. It offers passengers assigned seating, 36 channels of seat-back television, and live customer service agents (who work at home to keep costs down). And it's entirely paperless, from reservation desk to cockpit.
Challenge: A growing list of hungry discounters. Delta modeled its recent reorg on Southwest, and others will surely follow.
Opportunity: Transatlantic business. Time to take off for Europe!
26. FEDEX
Anywhere, Overnight
Last year: 26
The global economy couldn't function without rapid transport of everything from foodstuffs to first-run film reels. FedEx delivers the goods, moving 6 million packages daily. Last year's acquisition of Kinko's and rebranding of its stores as FedEx Kinko's mean customers make copies and ship them at the same location. Now CEO Frederick Smith is eyeing Europe's high-speed train system to strengthen his grip on the euro zone.
Challenge: Stay on top of electronic document delivery. Competitors like Pitney Bowes are eyeing the same business.
Opportunity: Deliver services as well as packages. By persuading customers to turn their supply chains over to FedEx, the logistics king could advance beyond the mail room.
27. MONSANTO
Sowing Controversy
Last year: 17
Monsanto has bowed to protest, postponing plans to sell genetically modified wheat, potatoes, and "farmaceuticals." These retreats still leave the company with four engineered crops: canola, corn, cotton, and soybeans. Sales hit $5.5 billion in its latest fiscal year, but CEO Hugh Grant is hedging: In May, he's due to acquire non-GM seed leader Seminis, tightening his grip on the global market for seeds, lab-modified or not.
Challenge: Win over European farmers. If soybeans didn't do it, maybe the perfect grape will.
Opportunity: Drop the protective stance toward intellectual property and do something truly monumental: feed the hungry.
28. MICROSOFT
Central Nervous System
Last year: 27
Highest R&D Spending: $7.8 billion
The networked home is nearly wired, but the battle over which device will sit at its center - PC, set-top box, or game console - still rages. Holding $34.5 billion in cash, Gates & Co. has spread its bets: The Media Center version of Windows is a hit; the Xbox is holding its own against Sony's PlayStation; and the giant's set-top software is touted by phone and cable companies. Ringside seats are as close as your living room.
Challenge: Where to begin? Finish the Longhorn OS, stop the migration of customers to Linux, thwart hackers, dodge the DOJ
Opportunity: Lock up the desktop even more tightly. Dominating PCs wasn't a bad move. Now monopolize the living room.
29. NOKIA
Cell Survivor
Last year: 15
If Nokia had a ring tone, it would sound like a sigh of relief. The king of the handset clawed its way back to 33 percent of global market share in Q4, after dropping below 29 percent. The company had missed two crucial trends - clamshells and phonecams - and competitors pounced. Nokia responded by slashing prices. Having sold 208 million phones last year - double the number of second-place Motorola - the Flying Finn is still on top. It plans to introduce 40 models this year, including its first 3G units.
Challenge: Regain the reputation of hippest cell phone maker around. Judging by Motorola's hotter-than-hot RAZR phones, there's work to be done.
Opportunity: The mobile workforce. Nokia's control of the Symbian alliance, whose software is in 80 percent of smartphones, positions the company to benefit whenever workers connect to HQ.
30. COSTCO
Upscale Wholesale
Last year: 29
Costco, the blue-state answer to red-state megastore Wal-Mart, has found that even affluent urbanites will shop in a warehouse if you give them quality and variety at the right price. How about those authentic Picasso drawings and 100 percent merino wool sweaters from Ralph Lauren? Costco marks up most items a mere 15 percent, as opposed to the retail-standard 30 percent plus. Employees also get exceptional value: Costco's average hourly salary of $16 trounces Wal-Mart's $9.99, and its workers enjoy better health coverage, too.
Challenge: Outmanuever Sam's Club, which aims for small business owners, and BJ's Wholesale Club, which targets consumers.
Opportunity: Cut promo deals with businesses that want to get in front of Costco's 27 million members. The take would be pure profit.
31. COMCAST
Broadbandit
Last year: 30
Comcast backed out of a grab at Disney last April yet emerged with its reputation intact. How? First, by having 21.5 million subscribers, the most in the US cable industry. And by succeeding at the dream of every cable provider: up-selling Comcast has signed up 40 percent of its customers for digital cable and almost a third for high-speed Net access. The capper is voice over IP: Comcast expects 8 million VoIP customers in five years.
Challenge: Position the company to be a leader of video-on-demand. The first step was buying a piece of Metro-Goldwyn-Mayer last year.
Opportunity: Keep expanding into telecom. Comcast offers the most complete bundle in the cable industry. Why not add a cellular plan?
32. PFIZER
Industrial Pharmer
Last year: 28
Big pharma requires big money, and Pfizer's got it. The company brings in more sales ($52.5 billion in 2004) and spends more on R&D ($7.7 billion) than any of its peers. And it's hugely productive, with 145 new compounds in the pipeline and 2,000 research partners searching for the next Lipitor or Viagra. Sure, the industry suffers from outrageous development costs and an uncertain market, but Pfizer's prescription is powerful stuff.
Challenge: Dodge fallout from the banning of Merck's Vioxx. Pfizer managed to keep its similar formulations Celebrex and Bextra on the market, but it could face a backlash in courts and on store shelves.
Opportunity: Embrace open systems. Pfizer hopes to corner the market for cholesterol drugs by bundling a promising newcomer with blockbuster Lipitor. Separating them would address a broader market - and better serve patients.
33. LI & FUNG
High Textile
New
With 65 offices in 38 countries, this Hong Kong company is the ultimate middleman. It custom-tailors supply chains, acting as connective tissue between glob al brands (like The Limited) and their far-flung manufacturers. In the process, Li & Fung has become one of the largest suppliers of Chinese-made clothing. The company handles everything from product development to finding the right factories to filling out customs forms. Yet it doesn't have production facilities of its own. It's the outsourcer that outsources.
Challenge: Play politics as effectively as production. China's bureaucracy is a tough customer.
Opportunity: Launch a Li & Fung label. The company would need to avoid competing with its own customers, but why should established brands get all the glory?
34. TAIWAN SEMICONDUCTOR
Blue-Chip Maker
Last year: 31
With the cost of building a cutting-edge silicon foundry approaching $4 billion, electronics companies have a compelling reason to outsource chip fabrication. Giving the job to Taiwan Semiconductor lets hardware makers like Broadcom, Sony, and Texas Instruments focus on design while dodging serious capital investment (like Taiwan Semi's planned $2.6 billion for 2005). And the company has a line on the world's most dynamic market: It's one of the few Taiwanese tech outfits approved to build plants in mainland China.
Challenge: IBM. Big Blue is moving aggressively into the foundry business.
Opportunity: Poach customers from stumbling rivals as the chip industry enters another of its cyclical downturns.
35. GEN-PROBE
A Germ's Worst Nightmare
Last year: 33
Someday doctors will use genomic data to prevent infectious diseases. Until then, there's Gen-Probe, whose nucleic acid tests detect scourges like hepatitis, HIV, pneumonia, and tuberculosis. Forty Gen-Probe products have gained FDA approval; its Procleix assay now screens more than 80 percent of the US blood supply. The result is fewer blood-borne infections, not to mention 2004 sales of $270 million and gross margins of 78 percent. That's one healthy business.
Challenge: Keep its big partners happy. Gen-Probe has been embroiled in contractual disputes with two, Chiron and Bayer.
Opportunity: Developing nations, where 43 percent of blood donations aren't tested for disease.
36. CITIGROUP
World Banker
Last year: 36
Largest Profit: $17 billion
The numbers are startling: 200 million customers in 100 countries, $562 billion in deposits, $1.5 trillion in assets. Citigroup set out years ago to become the world's bank, and the strategy is paying off as $9 billion out of $17 billion in 2004 net income came from outside North America, the most the company has ever collected overseas.
Challenge: Different regulatory regimes throughout the world. Recent troubles in Japan and Europe suggest Citigroup is too big to control from Park Avenue.
Opportunity: Buy Schwab. Citi's recent sale of the Travelers Life & Annuity unit put $11.5 billion in its coffers. With a few billion more, it could add another market share leader to its portfolio.
37. L-3 COMMUNICATIONS
Maximum Security
Last year: 35
For defense contractors, the prize used to be a next-gen fighter or missile system. Today it's twofold: a role in Donald Rumsfeld's high tech military "transformation" and a piece of the homeland security pie. L-3, whose products range from aerial drones to high-throughput airport baggage screeners, is succeeding on both fronts. Part communications expert and part military specialist, L-3 is the Terminator of emerging threats.
Challenge: Manage rampant growth. L-3's sales have ballooned sevenfold, to $6.9 billion, in six years. If the company isn't careful, it may soon need a Rumsfeldian transformation of its own.
Opportunity: Secure US ports. As a Coast Guard supplier, L-3 is poised to do the job.
38. AMERITRADE
Momentum Trader
Last year: 32
Ameritrade has amassed $76 billion in client assets - that's the good news. The bad news is that customers keep just 25 percent of their liquid assets in Ameritrade accounts. To pull in the rest, CEO Joe Moglia has launched Amerivest, a fee-based service that recommends portfolios of low-cost, exchange-traded funds. And to keep the cheapskates around, he's introduced Izone, a platform that charges only $5 a trade.
Challenge: Find a worthy successor to mastermind Moglia, who is due to leave in September.
Opportunity: Snap up the online accounts of TD Waterhouse as Moglia's parting shot.
39. EXELON
Next-Gen Generator
New
The nation's aging nuclear power plants are creaking at the turbines; the last US nuke built was ordered in 1973. Exelon exploits the industry's woes by buying underperforming plants, overhauling them, and cranking up efficiency. Where the usual nuke operates at 90.7 percent capacity, Exelon's 17 plants average 93.5 percent; the difference added 20 cents to last year's earnings per share. If a $26.1 billion merger with Public Service Enterprise Group is approved, the company will take on four more plants. As the threat of global warming makes carbon-free atomic power more palatable to the public, Exelon will supply it and make a healthy profit along the way.
Challenge: Opposition to nuclear energy. Exelon will have to step lightly as it boosts capacity.
Opportunity: Spearhead the post-Kyoto nuclear build-out. If Exelon runs new plants as efficiently as old ones, its future is assured.
40. BP
Black & Green Machine
Last year: 40
Most Sales: $285 billion
The energy giant's solar business edged into the black for the first time in 2004, with annual sales of photovoltaic products reaching $400 million. That's just one sign the company is truly beyond petroleum. BP is also curbing greenhouse gas emissions and boosting energy efficiency throughout its internal operations. One promising initiative: low-cost wireless sensors that monitor oil wells, predict equipment failure on ships, and control heat and light in offices.
Challenge: Silence critics who accuse BP of "greenwashing" - making token investments in alternative energy for the PR value. Beefing up commitments to wind and other renewables would help.
Opportunity: Build the infrastructure for the hydrogen revolution. Hydrogen cars won't rule the road until there are fueling stations to serve them.
In a world of relentless innovation, only the most agile companies stay on top. These all have had moments of brilliance, but none have managed to keep pace with shifts in technology and more nimble competitors.
IAC/InterActiveCorp
Even with AskJeeves, Diller's Net conglomerate has failed to pan out. Having spun off Expedia and Hotels.com, IAC is bottom-heavy in home shopping.
Inditex
The Spanish just-in-time fashion designer and retailer is executing well on its plans, but it has been severely outflanked in the US by rival H&M.
JDS Uniphase
Demand for JDSU's optical networking products remains one-fifth of its 2001 peak. The erstwhile highflier no longer sets the agenda in net hardware.
Level 3
Voice over IP was supposed to save Level 3's cash-burning bacon, but the company lost $216 million last year and nearly $1 billion in the two years before that.
Ryanair
The European discount airline continues to deliver financially, but it lacks the vision of its stateside counterpart, JetBlue.
WPP Group
The advertising behemoth's never-éending string of acquisitions is starting to look more like growth for growth's sake than a coherent strategy.
Duff McDonald (duffmcd@mac.com) wrote about theoretical physics in issue 13.01. Wired 40
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2. Google
4. Amazon.com
5. Yahoo!
7. Genentech
8. Toyota
10. eBay
11. SAP
12. Pixar
13. Cisco
14. IBM
15. Netflix
16. Dell
17. General Electric
18. Medtronic
19. Intel
20. Salesforce.com
21. Vodafone
22. Flextronics
23. EMC
24. Nvidia
25. Jetblue
26. FedEx
27. Monsanto
28. Microsoft
29. Nokia
30. Costco
31. Comcast
32. Pfizer
33. Li &Fung
35. Gen-probe
36. Citigroup
38. Ameritrade
39. Exelon
40. BP
