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1/11/2002
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Taking Stock: Changing Of The Guard In The InformationWeek 100 Index

Mix of companies both old and new join the stock listing

The InformationWeek 100 index declined 27% in 2001, making it one of the better-performing technology indices last year. This reflects the greater stability of those companies that service the world of business technology. After all, most of the companies are large, profitable, and have solid balance sheets, all positive attri-butes in a declining market.

Changes occur when companies have gotten below our $5 minimum price per share at year's end or equity market capitalization is less than $100 million. This doesn't mean those companies can't re-enter the index later. I bring this up to avoid E-mails from companies whose feelings may be hurt by their departure.

The companies added to the index strike a nice balance between old and new.

  • Riverstone Networks (RSTN--Nasdaq) is one of the spin-offs from Cabletron. It makes networking equipment such as switches and routers for the metro area.
  • Network Appliance (NTAP--Nasdaq) is a leading storage-appliance company that competes with EMC and StorageTek. It makes the addition of storage cheap and easy, unlike most corporate storage.
  • Network Associates (NETA--Nasdaq) is a leading company in antivirus, network security, and network availability software. It has gotten its house in order under a new CEO.
  • WebMethods (WEBM--Nasdaq) provides software to integrate disparate applications inside and outside a business.
  • Accenture (ACN--NYSE) is one of the largest IT consulting firms in the world and is a major beneficiary of corporate IT spending.
  • NetScreen Technologies (NSCN--Nasdaq) is a networking security company that focuses on high-performance firewalls and virtual private networks. NetScreen uses application-specific integrated circuits to increase speed. It's one of the few recent initial public offerings to make the list.
  • Borland Software (BORL--Nasdaq), an old-line name that's well known to most software developers, is back from the brink. Borland provides tools for software application development, deployment, and integration.
  • SBC Communications (SBC--NYSE), one of the two largest regional Bell operating companies, continues to dominate the United States' telecom landscape, now more than ever with most telecom startups out of the way.
These eight replace the following companies, all of which fell below the minimum criteria or, in the case of WorldCom, were replaced due to size and influence on their respective markets.
  • ADC Telecommunications: Sales have stagnated for the telecom equipment provider.
  • BroadVision: The E-commerce application vendor saw a steep decline in business as the E-business bubble burst.
  • Commerce One: A business-to-business E-commerce solutions vendor that saw business evaporate as companies curtailed spending on B-to-B projects.
  • Novell: Focused on software applications that let networks work together, it suffered under the general decline in technology spending.
  • Palm: It had a tough year with an onslaught of competition and management turmoil.
  • Redback Networks: The provider of central-office DSL equipment was hurt by delays in the Baby Bells rolling out DSL service.
  • WorldCom: No longer the dynamic leader it used to be. The downturn in the long-distance business and the subsequent restructurings have taken their toll.
  • MicroStrategy: The provider of business-intelligence software is no longer in its former leadership position.
Throughout the year, it's possible that a company in the index might fall below the minimum criteria set for the index. At that time, we'll replace it with another company in a similar or closely related industry.

Faithful readers should feel free to recommend suggestions for eventual inclusion--but keep in mind that this index focuses on corporate IT and not on consumer-oriented technologies. Let's hope that 2002 is brighter for technology than the past two years.

William Schaff is chief investment officer at Bay Isle Financial Corp., which manages the InformationWeek 100 Stock Index. Reach him at bschaff@bayisle.com.

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