2004 in Review:
Robust Revenue Growth and Rising Profits
April 4, 2005

The tech industry continued to grow and generate profits last year, finishing with strong financial results. In the fourth quarter of 2004, revenues increased by 13.1% from the same period a year earlier and profits reached their highest levels in seven years with a median net income percentage of 7.6. For the year, revenues increased by 15.7% from the previous year and profits rose to 5.6%. 2004 was the third straight year the tech industry increased revenues and profits, after bottoming out in 2001.

Hardware & Electronics Group
In 2004, Capital Equipment makers led the hardware and electronics group in Y/Y revenue growth (45.9%) and net income (9.7%). Technology Manufacturing Services companies reported strong Y/Y revenue growth (18.6%). However, they continue to struggle to generate profits more than any other sector in this group.

Software Group
Strong consumer-driven sales during the holidays helped Education & Entertainment Software companies lead the software group in revenue growth (61.3%).

IT Services Group
Data Processing companies led the IT services group in Y/Y revenue growth (19.2%) and net income (12.0%). It is the only tech-sector with double-digit revenue growth and profits every year since 1999. For the first time in history, Internet Services firms finished the year with a profit (0.5%).

Biotech Sector
The Biotech sector softened in 2004, with Y/Y revenue growth declining from 39.7% to 15.7% and net income dropping from 5.7% to 2.8%.

Source: Financial statement data on 356 public U.S. tech companies that had filed by March 31, 2005, as reported by Culpepper Financial Trends.

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