Editors' pick: Originally published July 22.
With its 6% spike this week on strong earnings, Microsoft's (MSFT - Get Report) share price is within striking distance of its all-time high reached all the way back in 1999. We thought it would be interesting to look back at how the other most valuable companies from the dot-com boom era have fared since that heady time.
At our request, Standard & Poor's compiled a list of the U.S. companies with the largest market capitalization on Dec. 27, 1999, when Microsoft hit an all-time closing high of $58.72 and was valued at a whopping $615 billion. Here's a look at how the four other most valuable companies from that list behind Microsoft have done since then.
1. Microsoft ($615 Billion Market Cap in 1999)
Microsoft's peak valuation came just weeks after Judge Thomas Penfield Jackson ruled that Microsoft operated a monopoly, raising the prospect of a breakup (an appeals court later reversed the ruling). Microsoft had just released Windows 2000 to manufacturers in late 1999, and would launch the operating system to the public in February 2000.
The stock dipped as low as the teens during the Steve Ballmer era from 2000-2014, but under Satya Nadella, Microsoft circa 2016 is battling for dominance of the cloud, instead of PC operating systems. Nadella recently launched a $26.2 billion purchase of LinkedIn (LNKD) , Microsoft's largest acquisition ever. The company's fourth-quarter revenues and earnings per share topped Wall Street forecasts this week, and sales of its Azure cloud product doubled year over year. The company's current market capitalization based on its number of shares outstanding is about $437 billion, still good for third-largest in the U.S. behind Apple (AAPL - Get Report) and Alphabet (GOOGL - Get Report) .
Since 1999, General Electric (GE - Get Report) has appointed a new CEO, Jeff Immelt, who reshaped the sprawling conglomerate he inherited from Jack Welch into a leaner industrial company focused on digital manufacturing. Immelt also steered the company through the 9/11 terrorist attacks, which occurred days after he took over, and the global financial crisis seven years later, both of which hammered GE's stock.
The company was among the insurers on New York's World Trade Center, which was targeted on 9/11, and its massive lending business was funded heavily by commercial paper, a market that froze during the 2008 crisis. Immelt was subsequently forced to cut GE's dividend for the first time, and the company lost its top credit ratings from Standard & Poor's and Moody's.
In the years afterward, Immelt sold the NBC Universal entertainment business and pared most of GE Capital's commercial and consumer lending businesses while also expanding into the industrial Internet of Things. Today, GE, which has lost 37% of its market value since the end of 1999, is still the ninth-largest company in the U.S. by market cap with a $301 billion valuation.
On Friday, GE beat analyst earnings expectations for its second quarter.
Shares of Cisco Systems (CSCO - Get Report) reached a nine-year high on Wednesday, hitting $30.63 and pushing the company's market capitalization above $150 billion. CEO Chuck Robbins is nearing his first anniversary on the job, having replaced 20-year veteran John Chambers, who led the company from 1995 to 2015. Just as Microsoft has shifted focus from the desktop to the cloud, Cisco has gone through its own big changes.
The Silicon Valley networking icon is using M&A and other tools to shift the core of its $47 billion top line from hardware to software and services with recurring revenues. UBS analyst Steven Milunovich called Cisco the "best-positioned legacy vendor" in a recent note. The networking business, which Cisco leads, has become less of a commodity, Milunovich wrote. Further, Cisco has high scores in user surveys, which could make it easier to move into new services of product categories. Promising outlets include cybersecurity, data centers and wireless.
"All in, we are impressed by the direction that Cisco is trending and believe that Chuck Robbins is the right man to usher the company into a new era of data analytics, connectivity and security," said Jim Cramer and Jack Mohr, the manager and research director for the Action Alerts PLUS Charitable Trust Portfolio, which owns Cisco.
Cisco has slipped all the way down to number 34 in the list of U.S. companies by market cap.
It's pretty easy to see why investors were so in love with the high-growth company that was Walmart (WMT - Get Report) back in 1999. Shares skyrocketed about 70% that year as then-CEO David Glass, who took over for founder Sam Walton in 1988, was knee-deep in leading an aggressive expansion of the retailer around the globe.
Same-store sales for Walmart's U.S. business rose an impressive 9%, while earnings soared 27%. Walmart ended the year with 3,752 stores worldwide. The retailer also had some other factors fueling investor enthusiasm, including solid GDP growth in the U.S. amid pro-growth policies from the Clinton administration and the fact that competition from Amazon was still years away from having a significant impact.
Since 1999, however, Walmart has had three different CEOs (all promoted from within), with current leader, 49-year old Doug McMillon, taking the helm in 2015. The company launched its web business in 2000, and is now forced to do battle every second of the day with the significantly larger and more ambitious Amazon. Protests by workers and advocacy groups have found their way to Walmart's gargantuan stores in recent years demanding higher hourly wages. Walmart caved to the pressure in 2015, vowing to hike wages to over $10 an hour while also improving training and employee benefits.
In the face of rising competition and an uptrend in wages, today Wall Street views Walmart as a slow growth retailer that happens to pay a nice dividend. Going all the way back to January 2000, shares of Walmart have risen just 6%, compared to the 52% gain for the S&P 500.
That under-performance comes despite Walmart now operating over 11,500 stores worldwide, selling almost four times as many groceries in its U.S. stores vs. 1999 and substantial growth in its online business. The market cap of the world's largest retailer currently stands at about $230 billion, good for 14th place among the largest U.S. companies.
After peaking in August 2000 at a record closing price of $72.94, chip giant Intel (INTC - Get Report) has seen its shares continuously slip since then without ever fully bouncing back. The chipmaker, which has long held its dominance in the PC chip market, has been trying to find new areas of growth as PC sales continue to decline. Intel has partly turned M&A to do so, as demonstrated by its $16.7 billion purchase of chipmaker Altera last year and its $7.7 billion buy of security company McAfee in 2010.
Intel stock did hit a 10-year high in 2014, but the stock has been pretty volatile since then. Shares fell sharply on Thursday following Q2 earnings that highlighted the stalling revenue of the company's Data Center Group -- a segment that had been tagged as a growth area for the company.
With a current market cap of around $169 billion, Intel has slipped to 27th on the list of the largest U.S. companies but it's still the biggest chipmaker. It will have to keep innovating and adapting, however, to stay ahead of its fast-growing, younger rivals.