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Former number ones
Who's gone public? Who's gone bust? Revisit the 14 companies that have occupied the top spot
ALTOS COMPUTER SYSTEMS
San Jose, Calif.
In 1990 this pioneering maker of microcomputers--having suffered a multimillion-dollar loss followed by nearly two years of flat sales thanks to intensifying competition from giants like Hewlett-Packard Co. and NCR Corp.--was acquired for $94 million by the Acer Group, a Taiwan-based manufacturer of personal computers. Altos had gone public at the end of 1982 and saw revenues peak at $176 million in 1988 and then fall to $140 million in 1989, the same year it experienced an operating loss of $15 million.
SIGAL CONSTRUCTION CORP.
Twenty years after he founded the general-contracting firm, Gerald Sigal is still at the helm. Revenues reached a high of $178 million in 1990, only to come crashing down the following year when Saddam Hussein's invasion of Kuwait sent Washington real estate prices plummeting. Sigal immediately branched into such new areas as cost consulting and international joint ventures, and revenues have been climbing steadily since, to $105 million last year.
PEDUS SERVICES INC.
Pedus, a provider of security and janitorial services, declined to offer any update. Former CEO Dick Dotts, who left Pedus shortly after the company topped the list, has been running a competing firm, Diversified Maintenance Services, in South Pasadena, Calif., for the past 11 years.
After coming in as #1 with sales of $423 million, this direct marketer of health, diet, and personal-care products became the target of several investigations, which sent sales tumbling to a low of $120 million in 1988. The company was eventually cleared of any wrongdoing. Since then, by expanding its operations overseas, Herbalife has grown into a $1.2-billion company. It has operations in 36 countries and its own satellite-dish network that broadcasts in 12 languages. Founder Mark Hughes retains 55% of the public company.
ABC SUPPLY CO.
Over the past 18 years ABC Supply has grown into the nation's largest roofing and siding wholesaler, thanks to a strategy of acquiring and consolidating ailing businesses. Founder and CEO Ken Hendricks projects 1997 revenues at $1 billion, up from $789 million in 1996. He has no plans to take the family-run company public. "We're a husband and wife and five children running a billion-dollar boutique," he says.
AMERICAN PHOTO GROUP CORP.
As the 1987 Inc. 500 issue was going to press, CEO Steve Bostic was negotiating the sale of his #1 film-processing company to Kodak. After the sale, Bostic spent the next several years doing what he calls "significant rather than successful" work with several nonprofit organizations. Most recently he launched the American Intercontinental University, a for-profit international school with 3,000 students on four campuses around the globe.
AMERICAN CENTRAL GAS
"This has been almost like an episode of Dallas," says Kevin Sullivan, talking about what has happened to the natural-gas-services company he founded with three Tulsa investors in 1983. After the business peaked at $420 million in revenues in 1990, the four founders began squabbling and have been embroiled in breach-of-contract litigation since 1993. CEO Steve Jackson, a founder, hasn't returned our calls, but Sullivan, now living in California, says most company assets have been sold.
COGENTRIX ENERGY INC.
This developer, owner, and operator of independent power facilities is the only company to have topped the Inc. 500 twice. Since the deregulation of the utilities industry, "lots of companies have gotten in--and then out," says Jef Freeman, vice-president of corporate communications. With 1996 revenues of $406 million, Cogentrix remains a leading independent power producer. Founder George Lewis has turned over the reins to his son David.
North Sioux City, S.D.
Climbing from its #2 perch on the Inc. 500 in 1990 with revenues of $71 million, to the #1 spot in 1991 with revenues of $276 million, Gateway has never looked back. Last year's revenues were $5 billion, making the company the number-two direct marketer of PCs in the country (behind global leader Dell). Gateway went public in 1993. Cofounder (and largest shareholder) Ted Waitt is still at the helm of Gateway, whose bovine-inspired packaging is widely recognized. Looking back, Waitt says, "When Mike Hammond and I started Gateway 12 years ago on my father's cattle farm, we knew it could be big. We talked big. But there's no way we could have been prepared to go from less than $300 million in revenues to $5 billion in six years. You can't so much prepare for that kind of growth as sort of ride it and try to manage it."
KINGSTON TECHNOLOGY CORP.
Fountain Valley, Calif.
Founders John Tu and David Sun sold 80% of Kingston--the world's leading manufacturer of memory upgrades--to the Japanese computer-publishing giant Softbank Corp. in August 1996 for $1.5 billion. Tu and Sun own 20% of Kingston and still run the company. "David and I haven't felt anything different at all since doing the deal," Tu says. Last Christmas they made headlines when they set aside $100 million "from our own pockets," notes Tu, for employee bonuses. They paid out $40 million of it, averaging $76,000 per employee.
Two years after topping the list, the diaper manufacturer nearly went bankrupt. "Everything that could have gone wrong did go wrong," sums up chairman Wally Klemp. But armed with fresh investment money, the publicly traded company posted record revenues of $207 million in 1996. Drypers' cofounder Dave Pitassi exited from the company's day-to-day affairs in early 1995. (See " My Name Is Dave, and I'm a Growthaholic")
OBJECT DESIGN INC.
Object Design lost $10 million on sales of $33 million in 1995, the year after it topped our list. Then "the market moved in our direction," says Justin Perreault, executive vice-president and chief operating officer. The company's flagship product, an object-oriented database- management system, served the burgeoning market of Internet applications--by helping people manage data on Web pages, for example. Now public and profitable, Object Design's 1996 revenues were $38 million.
THE FURST GROUP
When this reseller of long-distance service earned the #1 spot, CEO John Streep said he had a five-year goal of transforming the company "from a niche player into a one-stop retailer," expanding into such areas as paging and cellular services. Two years later, "all of that's come to fruition," he says. Since the company is in the midst of acquiring some major business contracts, Streep declines to offer specifics. "We've done a lot of reshuffling since we made #1," he says. "When you grow at 42,000%, you leave some inefficiencies."
Equinox, a direct seller of more than 350 products, posted revenues of $195 million in 1995, up from $102 million in 1994. In addition to water and air filters and personal-care and cleaning products, the company added a homeopathic line and long-distance phone service to its roster of product offerings.