In all, the CIOZone 100 had an aggregate net profit of $77.4 billion in 2007—quite a haul. But some 90% of the profit went to the top 10 companies.
By Robert Hertzberg
If there were any doubt that the U.S. technology industry is an oligopoly, one look at the profit distribution of the CIOZone 100 dispels it. The profits are concentrated in a handful of companies at the top of the list that have powerhouse positions in desktop software, enterprise software and microprocessors.
In all, the CIOZone 100 had an aggregate net profit of $77.6 billion in 2007—quite a haul. But some 90% of the profit went to the top 10 companies.
At the top of the list was Microsoft. The software giant's $16.96 billion calendar-year profit represented an increase of $5 billion from 2006—bigger than the full-year profit of all but five of the companies we looked at.
Still, Microsoft's rivals had a good year of their own. Google's profit grew 37%, to $4.2 billion, after the company extended its lead in Internet search. Apple, which long ago faded as an operating-system rival but continues to compete with Microsoft in the music-player business, had the biggest percentage profit jump among big companies, 68%, as consumer enthusiasm for the iPod spilled over to the newer iPhone and propelled sales of older Apple products, including the Macintosh.
Sun Microsystems, another onetime bitter rival of Microsoft's, returned to profitability after it cut jobs, added customers in emerging markets such as India and China and opened up its technology. And Sun's commitment to opening up its technology is continuing. Last month the Santa Clara, Calif.-based company completed its acquisition of mySQL AB, the maker of an open-source database, for about $1 billion.
Other big companies reporting double digit percentage profit gains included Intel (up 38%), SAP (37%), Oracle (29%), HP (20%) and IBM (10%).
Indeed, all but one of the 25 biggest companies on our list turned a profit in 2007. (The one money-loser was AMD, the 17th biggest company in the CIOZone 100, which wrote down part of the value of ATI Technologies, a company it had acquired.) Among the 50 biggest companies, only four lost money.
In general, things weren't nearly as healthy for the 50 companies on the bottom half of our list. Seventeen of them lost money. Among those struggling were two former industry stars, Silicon Graphics Inc. (2007 sales decline: 8%; loss: $138 million) and Borland Software (12% sales decline, $61.7 million loss).