From Dallas: Shifting Business Landscapes

Here is one that makes you look twice at what is happening to our nationss business landscape. It's a case in point from Dallas, Texas.

The Dallas Morning News’ D-FW Top 200 list provides an overview of the landscape of local public companies.

An analysis of the companies’ collective data also provides a reading of the Dallas-Fort Worth area's business performance. For instance, 2004 fiscal revenue of the 200 companies grew 14.7 percent over 2003, while net income grew 34.6 percent. Investors liked those results, too. The Bloomberg D-FW Top 200 stock index, a price-weighted index of the companies on last year’s list, gained 31.7 percent last year.

For the first time, a list member has less than $1 million in revenue. No. 200 Access Pharmaceuticals Inc. had 2004 sales of $549,000.

The newspaper expanded the list from 100 to 200 companies in 1996. In 1997, the smallest company on the list had $25.2 million in revenue. That figure has declined every year.

This year’s roster also featured the smallest turnover since the list was launched in 1985. Only 19 companies dropped off this year, compared with 25 in 2004 and a peak of 39 in 1997.

Both trends seem to suggest a certain level of stagnation, at least at the low end of the spectrum.

But the figures actually mirror a national trend — a shrinking universe of publicly traded companies.

Wilshire Associates — keepers of the Wilshire 5000 index, which attempts to track every U.S.-based public company — is one of the few organizations that analyzes the smallest of the small-caps.

The Wilshire 5000’s membership has dwindled from a peak of about 8,000 stocks a few years ago to fewer than 5,000 today. (That puts the lie to the index’s name, a fate that could befall the D-FW Top 200 next year.)

For both indices, the number of companies with at least $30 million in revenue has been falling over the years, while the number with at least $1 billion has surged.

The figures point to a consolidation, as big companies acquire smaller ones. Put another way, more companies are being acquired, going under or going private than going public or growing into multimillion-dollar concerns.

Certainly the universe of privately held companies is strong. The News ’ list of private companies has expanded to 100 this year, and revenue across the board increased over last year.

Read more here in the Dallas Morning News. (Free registration required)