Monday June 15, 3:21 pm Eastern Time
Company Press Release
SOURCE: FORTUNE
FORTUNE Chooses 12 Cool Companies for 1998
Magazine Also Reviews Cool Company Picks and Track Records of the Past Five Years
NEW YORK, June 15, /PRNewswire/ -- With the help of high-tech analysts, venture capitalists and industry pundits, FORTUNE editors have compiled their annual list of cool tech companies. Reporter Julie Creswell also identified which of FORTUNE's 125 cool companies picked over the past five years were investing winners and which were wallet-busters. This year's list of Cool Companies, along with the breakdown of five years of winners and losers, appears in the July 6 issue of FORTUNE.
In a surprising departure from previous years' lists, only three companies on the 1998 list are from California's Silicon Valley. Four of the companies are based in the Boston area and three others are headquartered in New York City and its suburbs.
The 12 companies are: Teligent, a telecom company based in Vienna, VA; Reality Fusion, an interactive computing firm headquartered in Santa Cruz, CA; Check Point Software Technologies, a security software company with headquarters in San Francisco and Ramatgan, Israel; eFusion, manufacturers of internet telephony gear in Beaverton, OR; Dragon Systems, makers of speech-recognition software located in Newton, MA; E Ink, creators of electronic paper located in Cambridge, MA; Autonomy, makers of intelligent searching software with offices in Cambridge, England and San Francisco; Invention Machine, a software startup focused on scientists, inventors and researchers, headquartered in Boston; Aware (Nasdaq: AWRE - news), makers of software for high-speed modems based in Bedford, MA; CTR Group, which is building an underwater global fiber-optic network and is located in Woodcliff Lake, NJ; Laybourne Company, creators of content for TV and the Internet based in New York City; and Medscape, a Web Site with online data for doctors located in New York City.
Any tech company, large or small, public or private, profitable or not, was eligible for consideration. In determining the list, FORTUNE editors and reporters relied on their high-tech sources to select which tech companies' management, products, ideas and technology are most exciting and ''cool.''
While Cool Companies is the least scientific of any of FORTUNE's lists, it has generated many picks that have proven to be savvy investments. Over the past five years, FORTUNE has dubbed 125 firms Cool Companies. If a person had invested $1,000 in the 42 companies that either were publicly traded when they appeared on the FORTUNE list, or had IPOs after FORTUNE named them as a ''Cool Company'', that investor would now have $76,830, a tad better than the S&P 500 stock index which would have turned that $42,000 into $75,223. That return handily beats the returns on two indexes that track smaller or more tech-oriented companies: the Nasdaq composite ($69,453) and the Russell 2000 index ($60,498). Had someone invested in PeopleSoft, one of FORTUNE's Cool Company picks in 1995, he would have had a 74.9% average annual return on his investment. Had he invested in the 1994 ''Cool Company'' Cisco Systems, his portfolio would have seen an 86% average annual return.
Of the 125 companies on FORTUNE's Cool Companies list over the last five years, four firms went belly-up, 24 merged or were acquired, and 42 are public. Of the 42 public companies, 17 beat the S&P 500 and 25 did not. FORTUNE says there am three lessons that companies can learn from being tapped ''cool'': tech companies that don't stay on the cutting edge are doomed; timing is everything; and finally, cool products are no guarantee of success.
The July 6 issue of FORTUNE is on newsstands beginning June 22. These stories, and other FORTUNE stories, are accessible at fortune.com.
SOURCE: FORTUNE
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