World's Most Admired Companies: Apple Is Still No. 1
By Shelley DuBois, Daniel Roberts and Geoff Colvin, FORTUNE on CNNMoney.com
Now that the skies are clearing after the worst economic storm in modern history -- far more violent than the experts had predicted -- we face a surprising new roster of winners and losers, as our 2011 ranking of the World's Most Admired Companies makes clear.
Stress in the recession and financial crisis brought out traits that may not have been noticed when the sailing was smooth. Upstarts became champions. Famed competitors fell behind; some didn't make it through the storm. The findings of our latest survey show a new competitive order in many industries and in business generally, one that will probably last years. How the winners won and the losers lost holds lessons of value for everyone.
The tumult is the greatest we've seen in 13 years of ranking the World's Most Admired. Of the 57 industries studied, 22 are led by new companies this year, the largest proportion ever. The changed order of the business world is particularly evident from another perspective -- our respondents' views about who are the best at critical business abilities. The recession changed global opinion thoroughly.
Here are the top 10 companies:
Apple
Top 50 rank: 1
Rank in Computers: 1 (Previous rank: 1)
Why it's admired
For the fourth straight year, Apple (AAPL) tops Fortune's Most Admired list. This year, the company's blistering pace of new product releases has continued to set the bar high for tech companies across the board.
Apple took a stock hit when it released news of iconic CEO Steve Jobs' ailing health in January, but Jobs assured the market in the company's earnings report that Apple was still "firing on all cylinders."
It certainly appears to be. Apple nearly doubled its quarterly profits vs. a year ago. The iPad 2 was introduced in March, marking the second generation of one of Apple's milestone product successes.
Another huge move by Apple was the announcement this January that the iPhone 4 would be available from Verizon, offering another option to consumers frustrated with dropped calls on AT&T.
Google
Top 50 rank: 2
Rank in Internet Services and Retailing: 1 (Previous rank: 1)
Why it's admired
Google (GOOG), in second place after Apple, maintains its reign as the king of search. The company is also spreading through more and more devices with its free, open-source operating systems.
Over 33 million phones worldwide now run on Google's Android operating system, according to a report by Canalysis, which named Android as the leader of all smartphone operating platforms. Google has also built its Chrome operating system for web-enabled devices, and most recently, the Honeycomb operating system for tablets.
Google also experienced a major executive shake-up this year. CEO Eric Schmidt, who has led the company's rapid ascent since 2001, will leave the position. Google co-founder Larry Page will take over.
Berkshire Hathaway
Top 50 rank: 3
Rank in Insurance: Property and Casualty: 1 (Previous rank: 1)
Why it's admired
Berkshire Hathaway (BRK.A, BRK.B) maintains its third-place spot this year. CEO Warren Buffett remains an admired champ, both for his judgments about stocks and for having built a huge operating company besides.
One recent stock-market judgment: Berkshire Hathaway increased its stake in Johnson & Johnson in 2010, from about 28 million shares to around 45 million, despite J&J's neverending product recalls during the year. In buying, Buffett followed his usual practice of picking up stocks when they're out-of-favor, betting on them to rise when trouble recedes.
Berkshire's most dramatic investment in 2010 was its $26 billion purchase of Burlington Northern Santa Fe. The railroad went on to generate more than $1 billion of operating earnings per quarter for Berkshire, making it a large factor in the company's 2010 increase of 13% in book value.
In Buffett's annual letter to Berkshire investors, he emphasized that American business, despite the economic uncertainties that persist, will continue to thrive. Berkshire, Buffett said, is backing that opinion with cash. "In 2011," he wrote, "we will set a new record for capital spending -- $8 billion -- and spend all of the $2 billion increase in the United States."
Southwest Airlines
Top 50 rank: 4
Rank in Airlines: 3 (Previous rank: 4)
Why it's admired
Since it started offering low-cost flights in the 1970s, Southwest Airlines (LUV) has been a more consistent performer than most airline companies. Recently, airlines in general have been receiving bad press for tacking on fees to compensate for rising fuel prices, but Southwest has remained one of the world's most admired.
Southwest generated strong earnings in its most recent quarter, with profits up 13% from a year earlier. The acquisition of AirTran will give the company more planes and should allow Southwest access to more markets.
Procter & Gamble
Top 50 rank: 5
Rank in Soaps and Cosmetics: 1 (Previous rank: 1)
Why it's admired
Procter & Gamble (PG) has incredible reach. It's the world's largest consumer-products company, with annual sales around $79 billion.
P&G has a long history of earning the respect of its peers -- fifth on the overall list this year, it's been ranked first in its industry every year it's been in the survey since 1997.
With commodity prices rising, P&G says it will have to raise prices on some products.
But P&G's products, including Tide, Crest and many other household staples, form a strong foundation to weather volatile prices down the supply chain.
Coca-Cola
Top 50 rank: 6
Rank in Beverages: 1 (Previous rank: 1)
Why it's admired
When it comes to Coke (KO), consumers still have a sweet tooth. The beverage beast has continued to expand across China, and has earned positive attention for its environmental efforts by conserving water.
CEO Muhtar Kent said in its latest earnings report that Coke "met or exceeded all of our long-term growth targets for both the quarter and the year."
Coca-Cola also continues to stand as one of the world's great brands, in a league with corporate giants like Nike and GE.
Amazon.com
Top 50 rank: 7
Rank in Internet Services and Retailing: 2 (Previous rank: 2)
Why it's admired
In December, Amazon (AMZN) announced that the 3G Kindle was its best-selling item ever. The tablet continues to dominate the e-reader market, despite initial fears that Apple's iPad would be a problem. Now, it seems many people are buying both, to serve different purposes.
In February, CEO Jeff Bezos directly targeted Netflix by offering streaming video to Amazon Prime members. It's all part an effort to strengthen the allure of this one-stop shop that is already top dog among online retailers.
Meanwhile, Amazon has invested in new technology and continues to see growth. Soon, Amazon.com will begin operating an app store for Android.
FedEx
Top 50 rank: 8
Rank in Delivery: 2 (Previous rank: 2)
Why it's admired
FedEx (FDX) hasn't bounced back from the recession as quickly as it would like. The shipping giant recently had to scale back its quarterly profit forecast due to a rise in fuel costs and expenses (blame the harsh winter).
On the other hand, businesses continue to rely on FedEx for timely deliveries and high-quality service. In February, the company completed the acquisition of AFL Pvt. Ltd., expected to strengthen its efforts in India and China. Emerging markets such as these have kept FedEx growing in the recent past.
Microsoft
Top 50 rank: 9
Rank in Computer Software: 3 (Previous rank: 5)
Why it's admired
In the past couple of years Microsoft (MSFT) has rolled out strong new products. Search engine Bing is a viable (though still vastly less popular) alternative to Google.
Xbox Kinect has successfully cut into the motion-sensor video game market in which Nintendo Wii and PlayStation Move compete. And its Windows Phone 7, according to early reports, is holding its own against Android, iPhone and BlackBerry.
Microsoft also says it has sold 300 million licenses for the Windows 7 operating system to date.
McDonald's
Top 50 rank: 10
Rank in Food Services: 1 (Previous rank: 1)
Why it's admired
What makes McDonald's (MCD) such an admired, recognizable brand, even amid an enduring fast-food backlash? New items on the menu have helped: salads (with Newman's Own low fat dressing!), wraps, oatmeal, and apple dippers.
In addition, the chain constantly adds to its Dollar Menu, catering to those who have felt the recession's crunch.
McDonald's also operates a wide range of charity programs, including teacher awards and youth basketball games. And financially, the company is doing fine. In January, McDonald's announced that sales were way up; since then, the stock has continued to rise, though shares overall are still down 2% year to date.
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