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Top 25: Business stories

Business feels technology's influence
The Internet and personal computers have had a large influence on the past 25 years of financial events.



1. Dot-com boom and bust
2. Consumer as king
3. Globalization
4. The Internet
5. Death of inflation
6. Real estate boom
7. Individual investor
8. September 11
9. Personal computers
10. 401(k) vs. pension plans
11. Merger mania
12. CEO perks
13. CEO perps
14. Downsizing
15. Tax cuts
16. HMOs/managed care
17. Oil shocks
18. 1987 stock market crash
19. The cell phone
20. Death of cash
21. IPOs
22. Deregulation
23. S&L crisis
24. Gambling as a major industry
25. Fall of Japan/Rise of China


Corporate Finance
Corporate Scandals

(CNN) -- Since 1980, technology's influence on the financial world has produced some of the biggest stories, according to a Money magazine ranking of the top financial stories of the past quarter-century.

The boom and eventual bust of the 1990s dot-com bubble tops the list. Technology companies saw their stock prices soar, college-aged kids become millionaire CEOs, and the squarest of squares -- stock market analysts - turned into celebrities.

And then it all came crashing down.

On April 14, 2000, an inflation report triggered a massive sell-off and the biggest point loss in U.S. stock market history. (Tech's five year hangover)

"One of the most important lessons that people learned during that time is that you cannot predict the future," says Ellen McGirt, a senior writer at Money magazine. "No matter how rosy it is, no matter how beautiful the Web site, no matter what the sales pitch or tag line is."

Technology also allowed the world at your fingertips with the Internet (No. 4). Surfing the Web on your personal computer (No. 9) has become as commonplace as making a phone call. From the comfort of our homes, we can now shop, bank, learn and communicate.

"The Internet has brought businesses from all around the world in touch with consumers from all around the world," said Ellen Stark, an editor at Money magazine. "So it has expanded how people can do business. You don't have to buy everything in your hometown anymore."

The death of cash -- caused by the rise in electronic payments, from credit and debit cards to online banking -- charges in at No. 20. "Stored value cards" are also making a big dent in carrying cash. The reloadable cash cards can be used for everyday purchases, from buying a cup of coffee to using a vending machine.

"You're going to eventually see more stored value cards, which might be a way for you to pay for small things," said Stark. "Something that's just a few bucks would be taken off a stored value card, rather than a credit or debit card."

Cell phones, and the immediacy they bring to the financial world, ring in at No. 19.

Individual finance

The power of American consumers (No. 2) -- enticed by the convenience of big discounters, the selection of cheap imports and the speed of the Internet -- has pushed prices down and service up. Generating two-thirds of the $12 trillion U.S. economy, according to government figures, consumers have become more demanding and less loyal. (The Darwinian world of retailing)

This individual power has transferred to investing as well. In 1980, only 13 percent of Americans owned stock. By the late 1990s, that figure quadrupled. Individual investors (No. 7) have spurred the growth of 401(k) plans, mutual funds and online brokers. (101 things for investors)

This rise of 401(k) plans and decline of pension plans ranks No. 10. Named for its tax code number, a 401(k) allows workers to deduct money from their salaries before taxes, as long as they put that money aside for retirement. The 401(k) gave workers control over -- and responsibility for -- their retirement savings.

"The rise of the 401(k) and the decline of the pension captures a kind of shift in the American mindset," explained Eric Schurenberg, managing editor of Money magazine. "The institutions that once took care of you aren't going to do that anymore."

HMOs check in at No. 16. At their peak in the 1990s, health resource firm Managed Care Online reports that health maintenance organizations insured 80 million Americans. But costly medical innovations and the soaring cost of malpractice insurance meant higher costs for the HMOs, according to Money magazine. This led to surcharges for patients, a cumbersome approvals process and claims that were denied outright. For many consumers, the promised savings evaporated. Employer-sponsored plans began to decrease, and many HMOs formed in the 1990s exited the business. Last year, only 69 million people were enrolled in HMOs.

Tax cuts (No. 15) are another issue that hits home. In 1981, President Ronald Reagan thought that if Americans paid less in taxes, they'd spend that money and that in turn would create jobs and get the struggling economy back on track. So he signed the biggest tax cut in U.S. history. Twenty years later, after signing into law his tax package (which will expire in 2011), the current President George W. Bush is now urging Congress to make those tax cuts permanent.

Freedom from government control is at No. 22. Intended to increase competition and promote innovation, deregulation sparked the growth of such companies as discount airlines Southwest and Jet Blue.

"Over the past 25 years, we've seen the deregulation of the airline industry, the financial services industry, the telephone industry, we're starting to see it in the utilities," said Money magazine's Stark. "And this is changing so many things for consumers. It's leading to more choice and lower prices but in many cases it's also leading to tougher decisions and more headaches."

Other stories that trickle down to the finances of the individual are companies' downsizing policies (No. 14) and the dramatic swings in oil prices (No. 17).

Big finance

In the past 25 years, mega-conglomerates via mergers (No. 11) have boomed. At a minimum, the public has seen the names of their banks change -- often several times -- or their phone company. Hundreds of thousands of people, though, have lost their jobs as a result of mergers.

For some investors, though, mergers have generated spectacular wealth. Shareholders of General Foods saw their stock jump 40 percent when Philip Morris bought the company in 1985. Philip Morris shareholders did even better. Twenty years later, the stock -- renamed "Altria" -- is up 2,200 percent.

But according to studies, the majority of mergers fail to deliver for shareholders. Daimler-Chrysler has lost half its value since the automakers combined in 1998. And among the biggest flops of all time was American Online's acquisition of Time Warner. And the stock price of Time Warner (parent company of CNN) about one-fourth of what it was in early 2000 when the deal with America Online was announced.

Mega-companies have paved the way for mega compensation for some CEOs (No. 12), such as Microsoft's Bill Gates and GE's Jack Welch. The average Fortune 500 CEO made $10.2 million last year in salary, options and performance-related bonuses.

At No. 21 is the IPO craze. In the mid-1990s, the number of initial public offerings exploded and seemed like the fast-track to overnight wealth. The Dow Jones reports that from 1992 to 2000, the average number of IPOs per year was at 160. But with the downturn in the economy, the frenzy cooled down, and the number hovered around 20 for years after that.

As businesses expand interests beyond borders, the past 25 years has seen the rise of globalization (No. 3) and the fall of Japan (No. 25) as a dominant economic force in the 1980s. At the same time, neighboring China began its economic rise.

Other booming businesses in the last 25 years have been in the fields of real estate (No. 6) and gambling (No. 24), which is now a multibillion-dollar industry in the United States. (The business of gambling)

At No. 5 is inflation. In 1980, "inflation" was a scary word, but today the economy isn't as intimidated. Experts say more goods to the United States are coming from developing countries where low wages keep prices down.

Financial damage

Along with the amazing success of the past quarter century came failures. The stock market crash on October 19, 1987 -- known as "Black Monday" -- gave investors a wake-up call (No. 18). Investor panic triggered a massive sell-off, causing the worst one-day percentage drop in the history of the New York Stock Exchange. In a single day, the Dow Industrial Average lost 22 percent of its value and half a trillion dollars of investor wealth was lost.

The economy again took a hit in the wake of the attacks on September 11, 2001. In the first 11 days after the attacks, the immediate economic loss was estimated at $164 billion. No longer feeling so secure, Americans chose to avoid public places and travel. September 11 crippled the insurance and travel industries.

At No. 23 is the Savings and Loan business crisis. In the 1980s, a wave of S&L failures hit the nation, caused by a real estate price collapse, mismanagement, and, in some cases, fraud. While investors lost billions, some industry insiders profited illegally. Those convicted of fraud and other felonies spent, on average, five years behind bars. (The other real estate boom: Scams)

The past 25 years have also recorded some of the most extraordinary financial scandals and crimes in the history of business, involving spectacular falls from grace by CEOs (No. 13). Energy trading company Enron collapsed in December 2001 and filed for bankruptcy protection after investigators found the company used the partnerships to hide millions of dollars in losses. More than 4,000 workers lost their jobs and many more lost or had reduced retirement savings. While former CFO Andrew Fastow is headed for prison, former CEO Jeff Skilling and former Chairman Ken Lay are headed for trial and still presumed innocent.

Dennis Kozlowski was convicted in June 2005 of stealing hundreds of millions of dollars from Tyco and its shareholders while Bernard Ebbers was charged for cooking the books at WorldCom. The arrest of Imclone's Sam Waksal for insider trading and Martha Stewart for lying to federal agents about her sale of Imclone stock spurred headlines, public outrage and prison time for both the former CEO and America's domestic diva. (Special Report: Scandal Inc.)

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