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Tuesday, April 08, 2003

By Jim McKay, Post-Gazette Staff Writer

As discouraged investors surely know, last year's precipitous decline in stock prices took out billions of dollars in market capitalization from many of Pittsburgh's biggest publicly traded companies.

	Behind the numbers Graphic: Market Capitalization Alcoa Business: Aluminum and related products Headquarters: North Side Employees: 127,000 PNC Financial Services Group Business: Banking, money management Headquarters: Downtown Employees: 23,800 H.J. Heinz Co. Business: Food products Headquarters: Downtown Employees: 39,000 Mellon Financial Business: Money management, investment services Headquarters: Downtown Employees: 22,500 PPG Industries Business: Glass, coatings and chemicals manufacturing Headquarters: Downtown Employees: 34,100

The Top 50 Pittsburgh companies ranked by market capitalization had a total market value at the end of 2002 of $85.9 billion, a drop of $39.5 billion from the year before when the total was $125.4 billion.

Alcoa, the world's largest maker of aluminum, kept its first-place position on the Top 50 list even as its own market capitalization fell to $17.24 billion at the end of last year from $30 billion at the close of 2001, a decline of more than 40 percent.

The metals producer continued to be the region's biggest public company in terms of its 2002 revenue of $20.26 billion. Its stock price declined by nearly 36 percent last year, a key determinant in the market capitalization calculation.

To make it to the top of this list it helps if you are a really big company that requires a lot of support, or money, from the stockholders. That's because market capitalization reflects the number of outstanding shares multiplied by the share price.

For this year's Top 50 list, the market capitalization figure was calculated using the stock price of the companies and their number of shares outstanding at the end of February.

"Weary investors heading forward might find large-cap companies favorable now because often times large cap companies are more established and perceived to be more safe. That might be the first place money goes if we see a market rally," said Brian Koble, a research analyst with Downtown brokerage Hefren-Tillotson. "At the same time, in a period where the economy is not going full throttle, small caps might have more room to grow."

Koble notes that Alcoa used the soggy economy as a time to cut costs -- a good thing -- but may have a hard time keeping its pricing firm going forward as the world is awash in aluminum capacity.

PNC Financial Services Group, ranked third a year ago with a market cap of $15.9 billion, bumped cross-town rival Mellon Financial from second place this year even as its market cap fell to $12.63 billion.

Mellon Financial fell from second to fourth place this year as its market cap dropped to $9.6 billion from $16.6 billion at the end of 2001, when Mellon sold its branch banking business to Citizens Financial Corp. for $2 billion.

H.J. Heinz, which sold its baby food, pet food, tuna and soup businesses to Del Monte Foods Co. in 2002, moved into third place from fourth last year with a market capitalization of $10.76 billion, down from $14.4 billion a year earlier.

"Mellon and Heinz are both undergoing some strategic changes. Mellon shed its retail banking business, and Heinz is focusing on its core business," Koble said. "The key for these companies is to hone their strategies and maintain their focus."

PPG Industries, the glass, paint and chemical company, kept its fifth-place ranking this year despite its market cap dropping to $7.8 billion from $8.7 billion a year earlier.

"PPG, like Alcoa, is leveraged to the economic cycle," Koble said.

"As the economy picks up, PPG will fare better and the key for them is pricing power. There's a lot of competition coming from overseas so it's difficult for them to raise prices."

Notably absent from this year's list is Adelphia Communications, which ranked sixth on last year's list with a market capitalization of $5.8 billion and is now operating under bankruptcy court protection.

The Coudersport-based cable company was caught up in scandal after the firm revealed it had secretly guaranteed billions of dollars in loans for its founder, John Rigas. He, along with his sons, were indicted on fraud charges.

A notable newcomer to the list is Dick's Sporting Goods, which went public last October. The sporting equipment company ended the year with a market capitalization of $450 million, good enough for the 22nd spot on the list.