LIST OF "SHINING STAR" COMPANIES IN DIGITAL UNIVERSE POINTS WAY TO NEW INDUSTRY PERFORMANCE MEASURES, KPMG CONSULTANTS SAY; "The Red Herring Guide to the Digital Universe" Names Top 250; KPMG's Metrics, Nominations, Viewpoint on Success Show Information Economy Plays by New Rules

Business Wire, April 9, 1996

SAN FRANCISCO--(BUSINESS WIRE)--April 9, 1996--KPMG's Information, Communications and Entertainment (ICE(SM)) practice, helping navigate the volatile and complex digital universe, has worked with a leading industry publication to identify 250 "shining stars"-- companies that industry executives and investors should watch closely.

Produced by the editors of The Red Herring -- the monthly magazine that covers financial and investment issues in the information, communications and entertainment industries -- "The Red Herring Guide to the Digital Universe" provides an overview of digital commerce and profiles 250 companies on the leading edge of the digital environment. The book will be released April 18 by Warner Books. The companies that appear in the profiles section which makes up the book's second half were chosen based on performance metrics and company nominations provided by KPMG ICE consultants, and on interviews with venture capitalists, investment bankers, industry analysts and high-tech executives from the U.S. and overseas.

In conducting its portion of the evaluation, KPMG ICE found that traditional measurements, such as earnings growth, market share, balance sheet strength and stock performance, were not adequate for identifying the best performers in the digital economy -- capitalization, marketing savvy, management vision and the ability to respond quickly to rapid, drastic shifts in the industrial landscape counted for more. "Many of the most interesting companies are still private and in their early stages of development," Roger Siboni, national managing partner of KPMG's ICE practice, writes in the introduction to the book's company profile section. "To evaluate these companies, we needed methods that better describe their mastery of the continually changing environment that characterizes the digital world. In essence, we needed to establish a new performance metric for the '90s."

Starting with a pool of 1,000 companies, the list was narrowed to 250. To make the final selection, KPMG and The Red Herring looked at a range of characteristics within five main categories - assessing a company's ability to contribute to a paradigm shift (based on its technology, marketing, alliance activity and business model, among others); the quality of its management team (including vision, strategic thinking, ability to attract and retain talent, and grounding in reality); the strength of its financial resources (including cash flow, debt burden, proportion of revenues from recurring sources, and consistency of revenues and earnings); market dominance (ability to set the terms of competition and overall share or high ranking in main markets) and market potential (revenue from products introduced in the past five years, technology leadership, and ability to be first to market). Taken together, the new criteria provide a means for evaluating both large companies and young startups on an equitable basis, Siboni says.

Despite the diversity of companies included, there were common elements among the companies that made the "shining stars" list. They tended to be:

o Younger (71.2 percent were established after 1979) o Smaller, in terms of staff, capitalization and revenue (58.8

percent had under 1,000 employees and 79.2 percent had under

10,000; nearly half -- 42.8 percent -- were privately

held; 19.2 percent had annual revenues under $10 million and

another 32.4 percent had none or wouldn't disclose) o From the West Coast (61 percent)

Forty percent were entertainment companies, 36.4 percent were from the computer industry (comprising hardware, software, networking and semiconductors, among others) and 23.6 percent were communications companies.

Siboni expects readers to challenge some of the selections -- and to point out omissions. In general, he believes that the list is more significant for the success criteria, company characteristics and industry trends it identifies, than for the particular companies that are listed. "In this technology business, things change fast. Today's bright star could be tomorrow's supernova. Whether these companies would appear in future versions of the list depends on whether they can adapt quickly, assess new opportunities and shift instantly to take advantage of them," he says. -0-

One of KPMG's five industry-focused lines of business, the Information, Communications and Entertainment (ICE(SM)) practice provides assurance and advisory services to clients who produce content, distribution and delivery systems for the information superhighway. KPMG is the only assurance and advisory firm to dedicate a full-service line of business to these industries as a group.

KPMG Peat Marwick LLP is the U.S. practice of KPMG, the Global Leader among professional services firms. Worldwide, KPMG has more than 6,000 partners as well as 72,000 professionals servicing clients through 1,100 office in 829 cities in 136 countries. In the U.S., KPMG partners and professionals deliver a wide range of value-added consulting, assurance, and tax services in five markets: financial services; manufacturing, retailing, and distribution; health care and life sciences; information, communications and entertainment; and public services.