It is not just a cultural perception, US-based technology companies really are superior. So says a recent study by investment banker Merrill Lynch, which looked at 32 technology companies, including software, hardware, semiconductors, telecommunications and consumer electronics suppliers, 17 of which are based in the US and the other 15 of which are non-US. The report found that US companies are nearly twice as profitable as their non-US competitors and, consequently, the stock prices of US companies are higher relatively when measured by a whole range of valuation criteria, including the classic price/earnings and price/growth ratios. Most expensive of all, relative to its earnings and growth, are shares in Microsoft Corp. The biggest non-US software company, meanwhile, SAP AG, came in fifth on the share expense scale. The report also dipped into the murky world of employee share options, a method of rewarding employees which is now so heavily used by US companies that observers are questioning the potential dilution of earnings, and also the masking effect options have on underlying profitability. On a scale of who has the most options pending, top once again is Microsoft, which has 20% of its outstanding share capital subject to employee stock options. Close behind is Dell Computer Corp with 17%, followed by Apple Computer Inc, Sun Microsystems Corp and Cisco Systems Inc, all with around 14%.
