Wal-Mart Tops 2002 Ranking of the Fortune 500; Oil Giant Exxon Mobil is No. 2 On List; GM Takes No. 3 Spot
NEW YORK--March 31, 2002--Wal-Mart Stores, the Arkansas-based retailer, jumps to the top of the annual FORTUNE 500 ranking of America's largest companies, becoming the first service company to rise to the No. 1 spot on the list.It displaces Exxon Mobil, the Irving, Texas-based oil company, which held the top spot last year and is now at No. 2. General Motors, which prior to last year held the No. 1 spot for 15 years, is No. 3 on the list for the second year in a row. Rounding out the top ten are Ford Motor (No. 4); Enron (No. 5); General Electric (No. 6); Citigroup (No. 7); ChevronTexaco (No. 8); IBM (No. 9); and Philip Morris (No. 10). The FORTUNE 500 list appears in the April 15 issue of FORTUNE, available on newsstands April 8 and at www.fortune500.com as of 9:00 a.m. EST on April 1.
"How did a peddler of cheap shirts and fishing rods become the mightiest corporation in America?," asks Cait Murphy, who wrote the introduction to this year's list. "The short version of Wal-Mart's rise to glory goes something like this: In 1979 it racked up a billion dollars in sales. By 1993 it did that much business in a week; by 2001 it could do it in a day."
Wal-Mart's leap to the top of the FORTUNE 500 is emblematic of a large economic shift. When FORTUNE first published its list of the largest corporations in America in 1955, Wal-Mart didn't even exist. That year, General Motors was America's biggest company, and in every year since, either GM or another mighty industrial, Exxon, has been No. 1. "The shift from making stuff to providing services has, of course, been happening for years," says Murphy. "Manufacturing's share of U.S. employment peaked in 1953, at 35%. It has been declining steadily ever since." America has also gotten richer, and larger incomes have led to increased spending on services. Economists call this a shift in the demand pattern; FORTUNE calls it the main reason that 65 of this year's top 100 are service companies.
And yet, says FORTUNE's Ann Harrington in an accompanying piece, "The Profit Plunge," most companies on the list experienced "sluggish revenue growth--a meager 3% increase, to $7.4 trillion, after two years of double-digit gains--and more significantly, a 53% drop in profits, from $444 billion to $206 billion. With the exception of 1992, when an accounting rule change drove earnings down almost exactly 100%, that's the deepest dive profits have taken in the 48 years of the FORTUNE 500."
In a year of accounting weirdness, Enron naturally stands out, having managed to reach the No. 5 position on the list. In "Revenue Games People (Like Enron) Play," FORTUNE's Carol Loomis explains how: "To begin with, Enron, going by the restated financials it issued for the first nine months of last year, inarguably was a huge company. Then, on December 2, Enron went into bankruptcy (a fact that doesn't disqualify it from the 500 list), and it has yet to report fourth-quarter results. The missing quarter, in which we knew revenues had fallen dramatically, gave us a problem...Rather than create a precedent of using revenue estimates on the FORTUNE 500 list, we decided to rank Enron based on its nine-months revenues of $139 billion--and that figure is what makes it fifth on our list."
Loomis also explains that Enron and other energy companies rose so quickly on the FORTUNE 500 list thanks to an accounting quirk: energy companies, unlike Wall Street firms, are allowed to list the "gross" value of energy trading contracts as revenues. This super-charged method of accounting for revenues helped push American Electric Power, located in Columbus, to No. 13, up from No. 146 last year, with an increase in revenue of 347.3%. Houston-based El Paso moves to the No. 17 spot, up from No. 86 last year, with increased revenues of 161.8%.
Geographically, California and New York top the list of states with the most FORTUNE 500 companies: California has 56, followed by New York with 51, 39 of which are in New York City. Texas comes in third with 46 companies, of which 20 are in Houston and 6 in Dallas. Illinois is fourth with 36 FORTUNE 500 companies, and Ohio is fifth, with 28.
In related stories about FORTUNE 500 companies, David Stipp describes how Amgen (No. 403), is burning brainpower to develop sophisticated biotech therapies, while Nelson Schwartz charts how Duke Energy (No. 14) became the un-Enron resisting financial tricks, complex partnerships, and other Wall Street fads. In an illustration of how the service ethic has infiltrated manufacturing, Stephanie Mehta describes how Lucent (No. 76) CEO Pat Russo plans to revive the telecom-equipment maker by making customers happy. Jerry Useem looks at Exxon's (No. 2) latest project in Africa, while Andrew Serwer reports on Bristol-Myers Squibb's (No. 96) troubled relationship with biotech firm Imclone. Finally, Shawn Tully takes a hard look at J. P. Morgan Chase (No. 21), and Fred Vogelstein profiles Dick Grasso, CEO of the New York Stock Exchange, where most of the companies on the FORTUNE 500 are listed.
Detailed data from the list will be available at www.fortune500.com, including company profiles of all FORTUNE 1000 companies, with revenues per dollar of assets, revenues per dollar of equity, and revenues per employee; a list of the FORTUNE 500 companies that also appear on FORTUNE's 100 Best Companies to Work For and Best Companies for Minorities lists; information about women CEOs of FORTUNE 500 companies; and more extensive archive information, including 16 individual company charts that map revenues and rank from 1995-present. There will also be rankings of FORTUNE 500 companies by revenues, profits, assets, shareholder equity, market value, earnings per share, total return to investors, and employees.
THE TOP 25 COMPANIES OF THE 2002 FORTUNE 500
(Rankings reflect revenues of previous year)
Rank Rank Company Revenue in % CHANGE
2002 2001 millions FROM 2001
List List
1 2 Wal-Mart Stores Bentonville, AR 219,812.0 13.7
2 1 Exxon Mobil Irving, TX 191,581.0 (8.9)
3 3 General Motors Detroit, MI 177,260.0 (4.0)
4 4 Ford Motor Dearborn, MI 162.412.0 (10.1)
5 7 Enron Houston, TX 138,718.0 37.6
6 5 General Electric Fairfield, CT 125,913.0 (3.0)
7 6 Citigroup New York, NY 112,022.0 0.2
8 20 ChevronTexaco San Francisco, CA 99,699.0 107.4
9 8 IBM Armonk, NY 85,866.0 (2.9)
10 11 Philip Morris New York, NY 72,944.0 15.3
11 10 Verizon Communications New York, NY 67,190.0 3.8
12 22 American International Group New York, NY 62,402.0 35.7
13 146 American Electric Power Columbus, OH 61,257.0 347.3
14 17 Duke Energy Charlotte, NC 59,503.0 20.7
15 9 AT&T New York, NY 59,142.0 (10.4)
16 15 Boeing Chicago, IL 58,198.0 13.4
17 86 El Paso Houston, TX 57,475.0 161.8
18 23 Home Depot Atlanta, GA 53,553.0 17.1
19 13 Bank of America Corp. Charlotte, NC 52,641.0 (8.8)
20 26 Fannie Mae Washington, DC 50,803.0 15.2
21 12 J.P. Morgan Chase & Co. New York, NY 50,429.0 (16.0)
22 18 Kroger Cincinnati, OH 50,098.0 2.2
23 51 Cardinal Health Dublin, OH 47,947.6 60.5
24 30 Merck Whitehouse Station, NJ 47,715.7 18.2
25 21 State Farm Insurance Cos. Bloomington, Il 46,705.2 (2.4)