Total sales and market value (MV) of the top 100 global technology companies
Note: sales in this chart are reported on a trailing 12-months basis.
Source: Ernst & Young analysis of Capital IQ data, accessed 13 June 2011.
Key performance indicators for top 100, 1Q11
Note: sales, operating income, R&D, levered free cash flow and capital expenditures are reported on a trailing 12-months basis. Percentage values noted above may differ due to rounding. Source: Ernst & Young analysis of Capital IQ data, accessed 13 June 2011.
“Technology innovation around the cloud, smart mobility and social networking will accelerate industry growth and, ultimately, improve the agility of all businesses.”
 | Pat Hyek |
Global Technology Industry Leader, Ernst & Young |
Fueled by ongoing technology innovations such as smart mobility, cloud computing and social networking, the top 100 global technology companies approached $2.5 trillion in aggregate sales for the trailing 12 months ending in the first quarter of 2011 and saw aggregate operating income climb 30% year over year (YOY).
1Q 2011 highlights
- Cloud computing, smart mobility and social networking are causing sweeping changes and leading to a period of hyper-innovation
- Aggregate operating income for the top 100 increased 30% YOY to $289 billion for the trailing 12 months
- Top 100 companies, as a group, traded at 11.6 times trailing 12-months operating income in 1Q 2011, compared with 13.9 times in the year-earlier period
- Sales for the trailing 12 months grew 19% YOY, to $2.5 trillion
- Top 100 companies tripled M&A buying YOY during 1Q 2011, to $11.5 billion
- Capital expenditures (capex) and research and development (R&D) spending increased at a faster rate than sales, and median free cash flow fell 16%
Technology disruptions yield "winners" and "losers"
The data above are highlights from Global technology trends and performance, January–March 2011. In this report, we show how smart mobile devices, cloud computing and social networking are driving a new wave of investment in client platforms (smartphones, tablets, computers), information infrastructure (data centers) and software that are providing valuable services to consumers and businesses alike — and influencing the evolution of the industry.
"Technology in the cloud already is transforming the industry's own business models, resulting in short-term winners and losers," observes Pat Hyek, Global Technology Industry Leader for the global Ernst & Young organization. "But in the long run, making technology available as a service, and freeing organizations to focus on their business strategies, will improve the business agility of all industries and accelerate growth in technology."
Spending and cash flow are notable
Median spending on capital expenditures soared 61% YOY for the 12 months ending in 1Q 2011 and median R&D spending increased 20%, while free cash flow dropped 16%. Yet the top 100's aggregate cash and investments grew 24% to $874 billion — $610 billion (70%) of which is concentrated in the top 25 companies.
Growth is unevenly distributed across technology sectors
In 1Q 2011, certain top 100 companies were leading innovators and others were fast followers — and the market appeared to be unforgiving if they weren't following quickly enough. As a result, industry growth was not evenly distributed among the technology sectors or the individual companies that comprise the top 100.
The internet sector, for example, had extreme variation in sales growth among sector companies for the 12 months ending in 1Q 2011, but the sector's median sales were virtually flat YOY. The booming semiconductor sector experienced the highest YOY increases (on a trailing 12-month basis) in median sales (59%), operating income (98%) and operating margin (53%).
Outlook: growing innovation tempered by macroeconomic uncertainty
Anticipating a bright long-term future for the global technology industry the emerging cloud computing paradigm is beginning to make technologies' benefits easier to achieve and more affordable. At the same time, smart mobility is empowering consumers as well as business organizations to exploit the cloud.
However, the short-term outlook — which varies by sector — is muddied overall by macroeconomic uncertainty leading to fears of a global "double dip" recession, which is not reflected in the 1Q 2011 performance data.
A deep dive into 1Q 2011 top 100 technology trends and performance
The following pages offer more detailed statistics and analysis:
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