America's largest corporations saw earnings skyrocket nearly 25% in the three-month period ended March 31, 2018, marking the largest jump in profits posted in at least eight years, as big companies benefit from strong economic growth and reap billions of dollars in savings from the Republican tax overhaul passed late last year. In a recent Barron's story, analysts looked at the role that management teams, and particularly the influence that the chief executive officers (CEO) of global corporations, have on driving earnings growth.
Company Leaders Champion 'Cloud Savvy and Smart Acquisitions'
In Barron's 14th annual list of the World's Best CEOs, analysts highlighted 30 company leaders that put their cash piles to particularly good use, emphasizing the importance of allocating capital to cloud computing transitions and cloud projects as well as strategic mergers and acquisitions (M&A). The analysts started by screening the S&P 500 index and the 250 largest non-U.S. companies for factors including revenue and earnings growth and share-price performance over the most recent five years. A Barron's team of editors and writers then chose the honorees based on the extent to which they viewed the executives' actions as vital to the success of their companies. About one-third of 2017's picks were removed from the list, so make room for this year's newcomers.
While Barron's chose 30 CEOs, Investopedia is focused mainly on seven tech CEOs from the report who helped boost their company's shares—and value for shareholders—by eye-popping amounts. For example, Reed Hastings, the 57-year-old CEO of on-demand video streaming platform Netflix Inc., (NFLX) has seen his firm's shares rise by 1,040% in the past five years. By contrast, the S&P has risen just 62.6% over the same half-decade. (For more, see also: 8 Stocks to Thrive as 2018 Cloud Spending Soars.)
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CEOs From Online Businesses Lead on List
One out of every six honorees lead online businesses, such as Amazon.com Inc.'s (AMZN) founder and the world's richest person, Jeff Bezos, as well as search giant Alphabet Inc.'s (GOOGL) Larry Page. Other tech CEOs on the list came from software vendors such as Cisco Systems Inc. (CSCO) rival Arista Networks Inc. (ANET), led by Jayshree Ullal, and Red Hat Inc.'s (RHT) James Whitehurst. Barron's also applauded legacy tech titans that successfully jump started their business restructurings in an environment where cloud computing rules. Shantanu Narayen, the CEO of revived tech player Adobe Systems Inc. (ADBE) and Satya Nadella, who has served at the helm of IT behemoth Microsoft Corp. (MSFT) since 2014, were two of such examples.
In the case of 35-year-old Adobe, Narayen has doubled down on the diversification of the firm's cloud-based platform as it heads off against rivals such as Salesforce.com Inc. (CRM) and Oracle Corp. (ORCL) in the commerce services space. Earlier this month, the Campbell, Calif.-based company announced a $1.7 billion deal to buy Magento, a cloud-based e-commerce service which rivals Shopify Inc. (SHOP). The company's third largest acquisition to date is part of a larger initiative at Adobe to create an end-to-end system for enterprise clients seeking to optimize digital ad strategy, build online commerce sites and manage other customer experiences and transactions. (For more, see also: 8 Stocks to Thrive as 2018 Cloud Spending Soars.)
Barron's included Wall Street darling Netflix CEO Reed Hastings on the list, pointing to his preemptive move to the cloud in 2007, "months before the first iPhone was released."
Other CEOs included in the list of 30 came from a range of industries such as media, food and beverage, finance, consumer products, travel and hospitality, and like Nadella, not all have served as CEO for five years. Facebook Inc.'s (FB) high-profile CEO and founder Mark Zuckerberg made the cut, despite his Silicon Valley company's recent woes surrounding its wave of consumer data scandals. Zuckerberg's buyout of Snap Inc. (SNAP) rival Instagram in 2012 has been viewed as a key element necessary for Facebook to continue attracting advertising dollars and ward off new competitors. Morgan Stanley's (MS) James Gorman, Royal Caribbean Cruises Ltd.'s (RCL) Richard Fain, The Walt Disney Co.'s (DIS) Robert Iger and Constellation Brands Inc.'s (STZ) Robert Sands, were also among those on the list.