100 Companies That Will Survive 100 Years - Not!!

Back in January Forbes published a list of 100 companies that - in their view - will still be around in 100 years based on 4 key factors - Strategic Governance, Human Capital, Environment and Stakeholder Capital. One good thing about this, of course, is that none of us - including the author - will be around to find out if he's right or not (though, darn it, I will give it my best shot)!

Interestingly enough, the original research behind the list was done by Innovest Strategic Value Advisors - who a month later were acquired by RiskMetrics group and therefore no longer exist (on their own anyway)! At least they didn't put themselves on the list ...

Not surprisingly, some of the companies on the list are the ones doing very basic things. Digging stuff out of the ground and flogging it to unsuspecting passers-by, like BHP-Billiton. No Exxon-Mobil though! Some are still basically monopolies  - East Japan Railway Company???

Interesting to look at some of those on the list vs. some who are not. No U.S. bricks-and-mortar retailers (no WalMart, no Costco). J.Sainsbury in the U.K., yes, but H&M from Sweden?? No Ikea? OK, so most Ikea stuff does fall apart quickly but they do have a pretty good, responsible model. Air France - KLM is on the list??? No Singapore Airlines, no Virgin, no British Airways???

In the Valley or technology related, here's what they have. On the list are:

• AMD(surely not?? See my thoughts below on this)
• Amazon.com (yes, totally agree. Disclosure: I own AMZN stock)
• Dell (don't think so - no longer the behemoth or cost leader and not enough innovation)
• Ericsson (maybe)
• HP (don't think so - HP will break up into many parts before then or be cost-cut into oblivion)
• Intel (yes)
• Nokia (maybe)
• Roche (if they keep the innovation at Genentech going)

Who's not on the list? No Apple. No Google. No IBM. Or anyone else in tech for that matter.

So, lets look at a couple of examples. Why do I question AMD's inclusion? Well, on May 1st - just two days from now - they will have been around exactly 40 years. During that 40 years they have managed to have accumulated losses through the end of 2008 of $6.2 billion. That's right - in 40 years they have lost $6.2 billion. Basically every penny of the $6.1 billion investors over the years have put into it. You can see this right here on page 93 of their last annual 10k filing with the SEC. Given that the fundamental premise of any business is to deliver increasing value for all stakeholders over time, surely this is a monumental failure? Does this seem like a company that could be around in 10 years, let alone 100?

By comparison, Apple, a younger company, has retained earnings (cumulative profits) of $16.6 billion on $7.6 billion of money put in (page 3 of this filing). They have top management, not just Jobs, and the best products and innovation in their category on the planet. Enormous cash flow. Disclosure - I own AAPL stock. I don't own AMD. Or Dell.

So, the list looks like rubbish. But, heck, its a lot of fun!!