Original Sender : Ari <[EMAIL PROTECTED]> --------------------------------- http://www.forbes.com/asap/99/0405/065.htm COMPILING THIS LIST OF THE MOST dynamic technology companies is a lot like naming the world's hottest 100 mountaineers. You can be sure that by next year (or maybe next month) many of your picks will have tumbled off the roster into the cold wastes of oblivion. The second annual Forbes ASAP "Dynamic 100" includes 52 repeaters. So what happened to the others, and where did the new guys come from? The two-word answer: dot com. The revolution, it seems, will be Webcast. Dynamic companies are supposed to cope with change. That's one of the six factors we used to make our selections. The painful truth is that dynamism itself is subject to change. Shifts in a company's operations, its competition, or its markets can quickly transform today's dynamic company into next year's shoulda-been. "With two-year development cycles and nine-month product life spans, everyone's got to move very quickly," says venture capitalist Kevin Compton of Kleiner Perkins Caufield & Byers. "If you're not building your technology, you're at risk." And even if you do, you might still be in trouble: "Asian demand just dried up, and no one saw it coming," says Wasatch Advisors analyst Ajay Krishnan. Result: Semitool (#8 semiconductor company last year) fell off the list after the capital equipment sector slowed down and its growth rate slumped. Manugistics, the second-ranked software firm last year, dropped from the list as well. Amid the weak demand from Asia, the company's pumped-up sales force couldn't cope with competitors like i2 Technologies (#5 in software this year) and SAP. Yet some stayed on the list this year by coping well with changes that threatened their status. Compaq (#5 in hardware, down from #2 in 1998) weathered bulging inventories and Wall Street's wrath early in 1998. By year's end it had trimmed inventories even as the company experimented with a new way of selling, copied from Dell's direct sales model. Amazon.com (#3 among Internet firms, up from #7 last year) met threats from Borders and Barnes & Noble by flawlessly executing a broader offensive aimed at transforming the company into an Internet shopping mall. Some new companies joined the list by taking advantage of opportunities that weren't as obvious a year or two ago as they are now. Ebay (#4 among Internet firms) came out of nowhere to invent and capture the market for consumer-to-consumer Internet auctions. As the legend goes, founder Pierre Omidyar's fianc�e bemoaned the difficulty of finding people to trade Pez dispensers with her, and he found, at last count, a $9.3 billion solution (Ebay's market cap as of February). A year's worth of changes can knock a respected company like 3Com off our list or catapult a no-name like Melita International (#38 in software) into the top 100. Still, our aim is to find firms that have a crack at staying on the list for a while-and even coming back after being bumped off the list for a year or two. We didn't expect to find this year's dynamic companies just by looking at SEC filings-numbers are only part of the story. A firm's financials alone don't tell much about its prospects for dominating its market. Instead, Forbes ASAP interviewed scores of analysts, money managers, and venture capitalists, asking them to rate more than 300 companies on the six factors we believe define dynamism in a technology firm today. First, obviously, we asked about overall responsiveness to change. Here, we wanted companies such as EMC (#3 among peripherals and manufacturing companies), which is leading the push into storage area networks-the newest paradigm shift in the data storage industry. Similarly, Network Associates (#33 among software makers) recognized that companies want one-stop shopping for Internet security; thus, it bought companies to fill just about every niche. Market opportunity, especially on the Internet, lost some of its pie-in-the-sky flavor as online commerce (and the market capitalizations that accompanied it) proved more enduring than anybody thought. Forrester Research estimates that worldwide Internet sales approached $80 billion in 1998. The dot com revolution had implications in every technology category, from hardware to telecom, as smart companies such as Dell raced to use the Net as a marketing tool. Meanwhile, within the cyberworld, firms such as Exodus Communications (#13 among Internet firms) addressed a potentially huge market, the high-end Web hosting business-which is expected to grow 100% annually through 2002-and acted quickly to lock up leading shares. 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