Industrial Research Institute's 3rd Annual R&D Leaderboard

Article excerpt

R&D spending by the top 100 U.S. technology investors in 2000.

Total R&D investment by the top 100 firms in the United States climbed from $104.9 billion to $109.6 billion in 2000, slightly outpacing inflation. For some 16 companies, mostly from the fields of electronics and communications, their strong increases thrust them into the top 100 for the year 2000, some for the first time. Companies that fell from the Leaderboard's list were a more eclectic group and included some players from high-flying sectors like pharmaceuticals, medical devices and communications.

Because the mix of companies is somewhat different each year, a second metric is also of interest. R&D spending increased by an average of 11.0 percent for the 100 individual companies that now make up the Leaderboard for 2000. By comparison, the new set of 100 companies for 1999 increased their outlay over 1998 by 7.0 percent.

Another indicator of the strong support for R&D in the year 2000 is that about three-quarters of the top 100 increased their outlays over the previous year compared with about two-thirds in 1999. Only one-third of those decreasing their expenditures in 2000 also did so in 1999.

Although much of the macroeconomic data usually available for this report is not complete, it appears from the 14-percent increase in R&D expenditures by the top 1,000 R&D companies that, once again, R&D levels increased as a percentage of Gross Domestic Product.

The top 100 R&D investors also continued to post strong earnings, up 4 percent from 1999 and, as a percentage of sales, up from 12.1 percent to 12.4 percent in 2000. It will be instructive to follow R&D outlays, as an absolute and as a percentage of sales or trailing earnings, for Leaderboard companies through the downturn that intensified in 2001. It has been demonstrated that those companies viewing R&D as an investment, and thus maintaining a more constant level of support through both good and bad times, outpace those whose support more closely tracks earnings cycles. …