SV150 Top 10: The best and worst performers
What public tech company in Silicon Valley had the best sales growth in 2016? Which had the biggest drop in sales? Who added — or cut — the most employees? We have the answers in our latest Silicon Valley 150. Here are the Top 10 winners and losers of 2016 by category:
Sales grew 2% to $849 billion during 2016, the smallest increase since 2009 when sales actually dropped from the year before in the wake of the Great Recession. The number of companies reporting sales gains, however, grew to 121, up from 106 the year before. Both IPOs on this year’s list were also among the top 10 sales gainers: Nutanix and Twilio.
Jobs grew 0.7% in 2016, down from a 4.5% increase the year before. Three out of 4 companies and 5 of the 7 sectors added workers, led by a 9% increase in employees at health sector companies. Semiconductors trimmed 5% of their workers and the consumer sector also recorded a drop after SanDisk disappeared following its acquisition by Western Digital.
Sales per employee
Sales per employee among the SV150 grew for a seventh straight year, rising 1.3% to a record $589,951. Productivity rose at 90 companies, 61 of which managed increases in both sales and workforce. Coherus Biosciences recorded the biggest increase thanks to revenue it recognized following the termination of its Baxalta Agreement with Shire in June 2016.
Net profit among the SV150 increased by $9 billion, or 6.8%, in 2016 to $142 billion. The number of companies that were profitable fell to 80, down from 84 in 2015. Missing from this year’s Top 10 is Apple, which recorded a 16% drop in profits on a 7% drop in sales, partly the result of “higher product cost structures” and the strong U.S. dollar.
Profit margin is net profit divided by sales. The SV150’s profit margin climbed to a record 16.7%, up from 16% the year before. Net profit can be dramatically affected by accounting events. eBay, for example, recorded a $4.6 billion gain from “realigning” its “legal structure”after spinning off PayPal that accounted for most of its net profit in 2016.
Net losses were recorded by 71 of the SV150 during 2016, or 47%. Half of the companies on this year’s list of biggest losses are repeats from the year before (Cypress, Tesla, FireEye, Twitter and WorkDay.) Impax Laboratories recorded the biggest year-over-year change, due to the write down of $541.6 million in the value of intangible assets acquired from Teva Pharmaceuticals.
Changes in market values
The combined market value of companies in the SV150 jumped 20% over the last year to $3.5 trillion, finally achieving a value equal to what it was worth, adjusted for inflation, at its all-time high on March 10, 2000 before the dot-com crash. Most of the year’s gains came since the election of Donald Trump. On the Friday before his election, the value of the SV150 was up just 2% for the year.
One way to see how investors value a company is by looking at what they are willing to pay for it relative to its sales. Investors valued the SV150 as a group at 4.1 times sales as of March 31, up from 3.5 times sales the year before. Facebook dropped from first to third on the list this year with its market value 15 times its sales, down from 18 times sales the year before. Two biotech companies recorded even higher ratios in 2016.
The SV150 generated a combined $228 billion in cash from their operations in 2016, up 5% from the year before. The cash helped fund a combined $116 billion in dividend payments and stock buybacks (down 5.5%), and $41 billion paid out for acquisitions, up more than 300% from 2015. The level of debt grew by 16% to $332 billion (with Tesla more than doubling its own). Still, as a group they had $761 billion in cash and investments at year’s end, up 14%.
Sources: Bloomberg financial markets, individual company reports and filings with the Securities and Exchange Commission. Data compiled by Jack Davis/Bay Area News Group