Dell Tops FORTUNE's List of America's Most Admired Companies; Moves up from No. 5 Spot Last Year, Wal-Mart—No. 1 Last Year—Falls to No. 4

Business Wire, Feb 22, 2005

NEW YORK -- FORTUNE announced today that Dell, the Round Rock, Texas-based computer company, is No. 1--for the first time--on the annual list of America's Most Admired Companies. Dell moves up from the No. 5 spot it held last year, displacing Wal-Mart, which held the No. 1 spot for the past two years. Rounding out the top ten are General Electric (No. 2); Starbucks (No. 3); Wal-Mart Stores (No. 4); Southwest Airlines (No. 5); FedEx (No. 6); Berkshire Hathaway (No. 7); Microsoft (No. 8); Johnson & Johnson (No. 9); and Procter & Gamble (No. 10). The list and related stories appear in the March 7 issue, available on newsstands February 28 and at www.fortune.com.

"Corporate reputation is the product of alchemy--a mixture of everything from the way a company nurtures homegrown talent to how it manages its balance sheet," says writer Abrahm Lustgarten. "Throw in one part customer satisfaction, another part shareholder return, add a splash of community citizenship--and voila!--you have a measure of that company's station in the hierarchy of American business."

This year there are a few surprises on the industry breakdown list. "How could Disney, for instance, lead the entertainment sector after a year in which its management soap opera dominated headlines?," asks Lustgarten. "Well, voters had high marks for the quality of Disney's products--and they may also have been looking at its stock chart for the year, which trounced those of rivals." There was drama in the tech sector as well. "Dell landed the highest honors in our company-wide survey, pushing IBM off the top ten entirely," says Lustgarten. "When it came time for computer firms to score their own, though, venerable Big Blue edged ahead. Why? Dell's peers see it as a brilliantly managed brand--but no innovator in raw computing." In other categories, Kinder Morgan Energy, first in the Pipeline category, racks up the highest peer score in the list's history, while Lowe's loses to Home Depot in the Specialty Retailer category.

To compile the list, FORTUNE and its survey partner, Hay Group, asked executives, directors, and securities analysts to rate companies with the largest revenues in 65 industries. To qualify for the list, a company must rank among the FORTUNE 1,000 or among the top 25 foreign companies in U.S. revenues. In all, 10,000 people ranked 582 companies on eight attributes: Innovation, Employee Talent, Financial Soundness, Quality of Management, Use of Corporate Assets, Social Responsibility, Long-term Investment, and Quality of Products/Services. For the industry breakdown ratings, the top half of the rankings list are the most admired companies and the bottom half of the rankings list are the least admired companies. To find the overall top ten, voters were asked to name the companies they most admire in any business, choosing from a pool that included last year's top quartile of finishers plus the top two on each industry list.

In a related story, Andy Serwer looks at how Dell has thrived as downward-spiraling prices and commoditization washed over the PC industry, benefiting its customers and bashing its competitors. "Instead of battling the tide by attempting to erect proprietary systems, as HP and IBM often did, Dell used its low-cost, direct-sales model to ride the wave. Today, by nearly every unit of measure (and the folks at Round Rock love to measure), Dell is irrefutably the No. 1 computer hardware company in the U.S."