The Starting Line: Tech chiefs' net worth takes a hit

Summary:The sharp drop of technology stocks in 2001 leaves no one unscathed, as many of tech's well-known chieftains saw their net worth plunge last year.

Oracle's Larry Ellison and Sun Microsystems' Scott McNealy were among the tech CEOs whose net worth took the steepest declines during last year's bear market.

Ellison's net worth sank more than $21 billion, or 52 percent, to $19 billion in 2001, and McNealy's fell to $685 million, or 55.9 percent, according to CNET's CEO Wealth Meter, which ranks tech chieftains daily based only on their cash and options compensation.

Given those losses, it's no surprise that Ellison and McNealy can't keep themselves from taking jabs at nemesis Microsoft, which saw its shares jump 53 percent in 2001. Microsoft CEO Steve Ballmer had a good year as the software giant emerged from ongoing antitrust problems in good shape, and launched its Xbox video game console and Windows XP operating system. Ballmer's net worth climbed to $15.87 billion for the year.

While Ellison and McNealy may have to refrain from thumping their chests over their net worth, they won't be heading to the soup kitchen anytime soon, either. Both have more zeros in their net worth than most folks can comprehend. Ellison lost $21 billion in 2001 and was still worth $19 billion on New Year's Eve. McNealy was worth $685 million at the end of the year, down from $1.5 billion at the end of 2000.

Last year's tech stock turbulence put Ellison well behind in a race to be the sector's richest man. In March 2000, Ellison closed in on the net worth of Forbes 400 king and former Microsoft CEO Bill Gates. Indeed, Ellison's $53 billion briefly overtook Gates' $51.75 billion in April 2000.

Since then, the companies' shares have taken divergent paths. Because Gates also has passed the CEO title to Ballmer, he is no longer included in the Wealth Meter rankings.

Should the tech sector shed a tear for the likes of Ellison? "Absolutely not," said David Hilal, an analyst at Friedman Billings Ramsey. "I can only

CEO winners and losers
These are some of the tech CEOs who saw the biggest changes to their net worth, as measured by the percentage change in holdings and absolute dollar change.
Winners
Gregory Fischbach, Acclaim Entertainment, 1,442%, up $35 million

Richard Braddock, Priceline.com, 343%, up $37 million

Margaret Whitman, eBay, 102.7%, up $219 million

Michael Dell, Dell Computer, 55.87%, up $3 billion

Steve Ballmer, Microsoft, 53%, up $5.5 billion 

Losers
Daniel Smith, Sycamore Networks, -85.6%, down $675 million

Scott McNealy, Sun Microsystems, -55.9%, down $867 million

Ted Waitt, Gateway, -55.3%, down $364 million

Larry Ellison, Oracle -52.5%, down $21 billion

Jeff Bezos, Amazon.com, -30.5%, down $544 million 

Source: CNET Investor
imagine, but I'd bet there isn't much difference between $20 billion and $40 billion.

"Besides, Ellison is bullish on the company so he has to view this as a temporary thing," Hilal said.

CEO net worth generally closely mirrors tech stock prices, which are prone to severe swings. And given that the intersection between the tech sector and Wall Street was littered with train wrecks in 2001, it's not surprising that CEOs lost a few zeros.

The winners
There were winners--even if some of them were just bouncing back from serious falls in 2000.

In absolute dollar terms, Ballmer, Dell Computer CEO Michael Dell and eBay CEO Meg Whitman had the best years.

Michael Dell's holdings were worth $8.4 billion on Dec. 31, up $3 billion for the year. Whitman, who has been selling shares of late, ended the year with holdings valued at $433 million.

In percentage terms, Acclaim Entertainment CEO Gregory Fischbach came out on top. He saw his net worth jump 1,442 percent to $38 million as the company's shares surged from 34 cents at the end of 2000 to $5.30 by Dec. 31.

Digital River Chief Executive Joel Ronning's net worth gained 570 percent in 2001 to end the year at $20 million.

Network Associates CEO George Samenuk also didn't have a bad year, up 517 percent. Among the percentage winners, CEOs from companies related to video games fared well.

Richard Braddock, CEO of online travel company Priceline.com, saw his net worth jump 343 percent to $47.6 million as the company's shares recovered from $1.31 to $5.82 in 2001. Braddock helped turn Priceline around by focusing it on the travel market, a move that helped the company turn a net profit.

It's conceivable that the winners in 2001 could continue to see their net worth gain in 2002. Digital River's Ronning said the company remains on the acquisition path, snapping up the customers of FreeMerchant.com on Friday. If Digital River can boost its earnings throughout 2002, Ronning may continue to benefit.

"As the company goes, so does the management," he said.

And analysts expect that security--Network Associates' home turf--will remain hot. Network Associates is seeing a payoff from focusing on corporate companies while its dot-com effort, McAfee.com, targets consumers and small businesses.

The losers
Aside from Ellison and McNealy, there were a few other familiar names on the CEO Wealth Meter loser list.

Amazon.com CEO Jeff Bezos saw his net worth fall more than 30 percent. The e-tailing giant withstood a turbulent year as Wall Street questioned the company's profit prospects, and "short" investors, who bet a stock will fall, targeted shares. Despite the decline in his net worth, Bezos ended 2001 with holdings worth $1.2 billion.

It was also a tough year for telecommunications executives. Sycamore Networks CEO Daniel Smith started 2002 worth $113.4 million, down from $788.3 million a year ago.

Gateway CEO Ted Waitt saw his net worth fall $364.4 million, or about 55 percent, to $294.5 million in 2001 as the company cut roughly 25 percent of its workers, shed its international operations, and shuttered 10 percent of its Country stores. The company tried to keep pace with rivals like Dell and find its niche in an increasingly competitive PC market.

"This past year has been tumultuous for Gateway," said Gerard Klauer Mattison analyst David Bailey. "Unless Gateway can reinvigorate its small business initiative, continued pricing pressure (primarily from Dell) and tepid consumer demand will limit the company's revenue and earnings at least through the middle of 2002."

Topics: Dell, Amazon, Microsoft, Oracle, PCs, Windows

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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