COLORADO 50: Heading in the right direction

By David Milstead, Rocky Mountain News (Contact)

Friday, April 25, 2008

The Rocky Illustration

You recognize these names.

The companies at the top of this year's Rocky Mountain News' Colorado 50 represent the biggest and best of the corporate crop. They're also some of the state's most iconic success stories.

* Qwest, in its third first-place finish in the six-year history of the Colorado 50, continues its comeback from financial woes that threatened the legacy of its predecessor, U S West.

* Liberty Media is the second multibillion-dollar enterprise in the history of John Malone.

* Dish Network, formerly known as EchoStar, is a Fortune 500 company that grew in just a generation from CEO Charlie Ergen's attempts to sell satellite dishes out of the back of pickup trucks.

* Molson Coors - or, at least, its predecessor Adolph Coors Co. - is older than Colorado itself. It's only been in the past three decades, however, that it's reached beyond the American West and made its beer a true national brand.

"These are sort of the four horsemen of the noncyclical Colorado engine," said David Maney, the co-founder of local investment bank Headwaters. "They're very real and substantial businesses based on fulfilling our fundamental societal needs, rather than something that's evanescent."

The Colorado 50 is not a hall of fame or lifetime achievement award, however. The Rocky created it to recognize the biggest - and best - Colorado companies. The rankings took into account revenue, market capitalization and number of employees.

They also consider net income and one-year growth in earnings per share for 2007, two measures that often trip up the state's most familiar names. After all, when big companies post a loss, they lose an awful lot of money.

Conversely, they can make an awful lot of money, which is what the top companies did in 2007.

Qwest's $2.92 billion in net income, due largely to a $2.25 billion tax benefit, was the biggest profit by a Colorado 50 company in the six-year history of the rankings.

Liberty Media's $2.11 billion in net income was the second-best profit in Colorado 50 history. Dish Network and Molson Coors also posted fat bottom lines in the hundreds of millions of dollars, and all four companies posted healthy earnings per share gains.

This year, 94 companies made the cut for consideration, down from 106 last year. To be eligible, a company had to be listed on a major stock exchange and have a market capitalization of at least $10 million at year-end 2007. Companies also had to file annual reports with the Securities and Exchange Commission on a timely basis. Standard & Poor's Compustat provides the raw data to the Rocky.

Qwest has ranked No. 1 in revenue in each of the six years of the Colorado 50, even as its annual sales have fallen from $15.5 billion in 2003 to today's $13.8 billion. This year, it leads not only in revenue and net income but also in employees with 37,000.

Although the top four of this year's list have long been familiar to Coloradans, some newcomers made significant moves into the top 10.

* Chipotle Mexican Grill jumped 24 spots to rank No. 5, helped by a sharp increase in its stock price, which pushed its market capitalization to nearly $5 billion by the end of 2007. Chipotle also has 18,800 employees, a figure only five companies exceed.

* ProLogis, a well-established but little-known Denver company, continued its climb this year. The warehouse leasing company reached No. 6, up from No. 9 last year. Acquisitions have helped the company grow to rank No. 6 in revenue and No. 3 in profits among this year's ranked companies.

* Crocs jumped 10 spots to No. 9. Like Chipotle, the shoemaker saw a significant jump in market capitalization, and its 2007 net income was more than double the prior year's. (A recent earnings disappointment, and the resulting sharp drop in Crocs stock, does not augur well for next year's ranking.)

* Emergency Medical Services, which went public in late 2005, jumped eight spots to No. 10. The company combined profit gains, more than 18,000 employees and more than $2 billion in revenue to propel itself forward.

Three companies made their Colorado 50 debut in their first year of consideration: No. 12 Woodward Governor, which designated Fort Collins as its headquarters last year; No. 23 National Cinemedia, which went public in 2007; and No. 25 Einstein Noah Restaurant Group, which restructured itself with a stock sale and got listed on the Nasdaq after years in the penny-stock world.

Historically, the question has been whether Colorado's emerging companies continue to ascend or instead choose to sell out in a merger or acquisition. That's been a recurring theme of each year's Colorado 50, as a number of up-and-coming corporate concerns have disappeared from the list.

Three of last year's 50 - No. 8 First Data, No. 15 Archstone-Smith, and No. 28 Macdermid - went private in leveraged buyouts. All three companies still operate in Colorado, but none sells its stock to the public. Sirenza Microdevices sold to a competitor, RF Micro Devices.

Perhaps reflecting the slowdown of the merger market that began in August, those four merger-related departures were a decrease from the previous year, when seven companies sold themselves or went private.

Harry Lewis, a retired investment banker who started his career in Colorado business a half-century ago, has long felt Colorado has been "a farm club for the rest of the United States."

Lewis and others point to Colorado's youth, giving it less time to develop a business infrastructure, as a reason why the state's companies seem less likely to be acquirers than the acquired. Another suggestion for the phenomenon: a Western entrepreneurial culture where many public companies are built to sell.

"Managing exponential growth is one of the biggest challenges - it's very difficult to maintain those rates of growth," Lewis said. "I think a lot of times in today's environment, the founders and controlling shareholders of a company want to cash out, and they see the merger possibility as the best option."

Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.

Bottom feeders

Revenue

US Gold 0

Allos Therapeutics 0

Golden Cycle Gold 0

General Moly 0

Biofuel Energy 0

Vista Gold 0 Market cap

Millions of dollars

Infinity Energy Resources 11.6

Encision 14.5

Arc Wireless Solutions 15.3

XELR8 Holdings 16.4

Good Times Restaurant 22.1 Employees

Number of employees

DCP Midstream Partners 0

TransMontaigne Partners 0

Golden Cycle Gold 2

Pure Cycle 3

General Moly 7 Net income

Millions of dollars

Newmont Mining -1,886.0

Level 3 Communications -1,114.0

MDC Holdings -636.9

Liberty Global -422.6

Evergreen Energy -204.7 EPS gain

Percent

Delta Petroleum -24,500

American Oil & Gas -2,716

Kodiak Oil & Gas -1,000

Centennial Bank Holdings -719

Pure Cycle -640

Revenue

Millions of dollars

Qwest 13,778

Dish Network 11,090

Liberty Media 9,423

Liberty Global 9,003

Ball 7,475

Market cap

Millions of dollars

Liberty Media 26,460.6

Newmont Mining 22,105.1

Western Union 18,205.1

Dish Network 16,919.7

ProLogis 16,333.8

Employees

Number of employees

Qwest 37,000

Red Robin 25,285

Dish Network 23,000

Liberty Global 22,000

Liberty Media 19,070

Net income

Millions of dollars

Qwest 2,917.0

Liberty Media 2,114.0

ProLogis 1,074.3

Western Union 857.3

Dish Network 756.1

EPS gain

Percent

Heska 2,000

Ramtron 1,750

Spectranetics 520

Qwest 407

National Cinemedia 275

• April 26, 2008

  9:04 a.m.

  Suggest removal

  SASQUATCH writes:

  The economic outlook gets brighter and brighter with most incoming reports. Q1/08 GDP will record positive GDP growth. The sub-par period of economic growth that began in Q4/07 will likely end by 2H/08 without registering one negative down GDP quarter. The often predicted "recession" simply never arrived. We should be off to the economic races in a few short months--solid growth is already baked into the cake.

• April 26, 2008

  3:47 p.m.

  Suggest removal

  andybosselman writes:

  It's too bad the cool charts from the print edition didn't make it online.

  Andy
  http://andybosselman.blogspot.com/

• April 26, 2008

  5:08 p.m.

  Suggest removal

  DonaldJohnson writes:

  On my blog, I offer links to charts the stocks whose symbols I know. And I'll be writing up some of them.

  www.businessword.com