'

Fluidity of IT's growth

The disparity in growth rates of this year's top 10 fastest-growing companies reflect the industry's competitiveness.

These days, companies have a tougher time getting on the growth path, much less staying on it.

But a handful of IT vendors have done just that this past year, with one dot-com do-gooder--in particular--outshining its peers with exceptional growth achievements.

Companies in ZDNet Asia's fastest-growing revenue and net income lists are players in a range of industry segments, including software, online services, search and telecommunications.

"The almost total changeover of the top 10 fastest-growing net income list perhaps suggests that the rapid velocity of change in IT, represents a perpetual threat to IT companies."
-- Colin Quek,
Top Tech advisor

Unlike 2005's list, the disparity in this year's top 10 companies with the highest net income growth average is less extreme. Last year's leader Altiris, scored a whopping 4,740.1 percent average year-on-year net income growth over four years--a far cry from second-placed winner Network Appliance, which average growth was still a decent 865.8 percent.

In comparison, this year's leader in the fastest-growing net income list, Novell, chalked up an average 424.30 percent year-on-year growth rate over four years, followed by Software AG's 296.63 percent.

In fact, the average growth rate among the top 10 companies was 252.25 percent, compared to last year's 875.28 percent.

More significant, Yahoo is the only company to remain on the fastest-growing net income list for two years in a row, though its four-year average dropped slightly from 283.5 percent in 2005 to 278.20 this year. But the dot-com survivor managed to increase its four-year average revenue growth from 74.5 percent in 2005 to 79.18 percent this year.

The changing of guards between nine of the top 10 fastest-growing net income list signals the highly-competitive environment tech companies play in, or perhaps, reflects the fluidity of the IT market.

Colin Quek, CIO of Raffles Medical Group, said: "The almost total changeover of the top 10 fastest-growing net income list perhaps suggests that the rapid velocity of change in IT represents a perpetual threat to IT companies.

"That what works now, is no guarantee that it will be good enough in the future," said Quek, who was one of the advisors for this year's Top Tech awards.

Ng Koh Wee, executive vice president of IT, Great Eastern Life Assurance, agreed: "It is inevitable that there would be significant changes every year [in the fastest-growing revenue company] list.

"The IT industry is still very fluid... It is a reflection of the short product lifecycle and the constant need to innovate to remain in business in this industry."
-- Ng Koh Wee,
Top Tech advisor

"The IT industry is still very fluid, and as such, we can expect fortune to rise and fall year-on-year. It is a reflection of the short product lifecycle and the constant need to innovate to remain in business in this industry," said Ng, who is also on this year's Top Tech advisory panel.

The 10 companies on this year's fastest-growing net income list are: Novell, Software AG, Yahoo, Computer Sciences Corporation, Avaya, Apple Computer, EMC, Red Hat, Baidu.com and Google. (See below for their average growth numbers.)

Fastest-growing revenues
While several batons were tossed in the net income list, five of the winners in last year's fastest-growing revenue list strolled into this year's top 10 rankings: Baidu.com, which retains its leading position, Red Hat, Research in Motion, Salesforce.com and Yahoo. The other five newcomers are: Google, Lenovo Group, SingTel Group, Infor Global Solutions and Juniper Networks. (See below for their average growth numbers.)

It is hardly surprising that several repeat winners play in markets that have hogged many news headlines the past year, including search (Baidu.com), open source (Red Hat) and on-demand software service (Salesforce.com).

Pierre Hennes, a partner at Upstream Ventures, said companies that have managed to stay on the growth path were probably able to do so by expanding either into different markets or investments. "They are probably also good at squeezing out [revenue/profit] margins, and have good cost-management strategies," noted Hennes, who is a Top Tech 2006/2007 advisor.

Top 10 fastest-growing companies
Here are the companies that scored highest in their ability to grow revenues and net income, alongside the corresponding average year-on-year growth rate over a period of four years.

Company Revenue Growth (%)
1. Baidu.com 210.67
2. Google 147.86
3. Red Hat 135.39
4. Lenovo Group 123.69
5. Research In Motion 91.45
6. Salesforce.com 82.56
7. SingTel Group 79.56
8. Infor Global Solutions 79.54
9. Yahoo 79.18
10. Juniper Networks 57.77

Company Net Income Growth (%)
1. Novell 424.30
2. Software AG 296.63
3. Yahoo 278.20
4. Computer Sciences Corporation 252.17
5. Avaya 244.77
6. Apple Computer 229.95
7. EMC 207.41
8. Red Hat 203.81
9. Baidu.com 201.60
10. Google 183.64

Note: Data correct as at September 2006. Information was compiled by ZDNet Asia from sources such as official reports, corporate Web sites, and Hoover's. ZDNet Asia strived to get the latest information but does not guarantee the correctness or completeness of the data. The information provided on this site is for general informational purposes only and is not an offer to buy or sell any securities.