More SV 150

Change is the one constant in Silicon Valley.

New tech pushes aside the old, taking over its buildings and knocking the last boom's darlings off the front page and the trending list on Twitter.

This newspaper's annual ranking of top Silicon Valley public companies captures much of that jockeying. And through it, we can see the tech industry's broad trends: Web, consumer and clean-technology companies are the hot sectors now. Chips, hardware and networking firms are cooling.

But those sweeping technological changes are the backdrop to the stories of individual companies. In fact, it often seems the story of Silicon Valley firms takes one of two forms: Company surprises with innovation outside its core products. Or former superstar attempts a comeback.

"The great news of Silicon Valley and the Bay Area economy is that as companies become mature, and less cutting edge, there is always newer companies taking their place," said Enrico Moretti, an economics professor at the UC Berkeley. "That's what makes this area so prosperous. It's about reinventing itself."

Sure, that's great for the industry and the region. But for tech investors and workers, who live the industry churn every day, the upheavals are exciting and nerve-racking.

And for columnists like me, it's an opportunity to share some observations about the companies that made our list this year:

Top of the hill -- for now

Let it be said throughout the land: Apple remains King of the Valley.

For the third year in a row, the maker of the iPad and iPhone is the No. 1 tech firm in the region when it comes to sales. Apple saw $174 billion in revenue, up 6 percent compared with the previous year. We expect Apple will surprise us.

Apple is comfortably ahead of Hewlett-Packard, the No. 2 firm with $112 billion in sales last year. For HP, 2013 marked the third consecutive year of diminishing sales, a trend that has accelerated over that period. The storied firm struggles with slowing computer sales and businesses shifting to the cloud.

Companies like HP and Yahoo, now 19, down a notch, have been in comeback mode for a while. They and other valley firms not among the 105 who experienced sales gains in 2013 are dogged by the question: How long can a company survive without sales growth?

The one to watch

Sometimes a company takes a slow and steady path to dominance.

The Silicon Valley turtle is Google, now No. 3. It swapped places this year with Intel, now No. 4, an indication of Google's continued ascendancy and Intel's challenges. Google has been rising steadily in the rankings since it debuted on the SV150 in 2004 at No. 16.

In the past year, Google's 16 percent rise in sales on top of its 22 percent surge in profits have propelled the search giant to rival Apple as the world's most valuable company. Its market cap -- the number of outstanding shares multiplied by stock price -- is up 54 percent.

"Google understands innovation and disruption," said Steve Blank, a serial entrepreneur and lecturer on entrepreneurship at Stanford University and the UC Berkeley. Google is among companies run by their founders, he said, who are "desperately trying to keep the innovation going."

Employee growth

Something that may be obvious to those who live here but is still worth saying: The fortunes of Silicon Valley employees are tied to their companies' prospects.

No firm illustrates the upside for employees better than Tesla.

The company, headed by Elon Musk, is this year's jaw dropper in a lot of categories. It vaulted 42 slots from last year SV150's sales rankings to 39th. It is the No. 1 company when it comes to growth in sales. Tesla also tops the charts for market value growth.

Likewise, the electric car manufacturer has been hiring like mad. Tesla ranked third for employee growth and ranked first for the percent gain of sales-per-employee ratio, a sign of worker productivity.

In fact, the cleantech sector is turning out to be a big employer. SolarCity, where Musk serves as chair of the board, ranked fifth in terms of employee growth.

Sure, the top tech employers added the most jobs: Cisco, Apple, Oracle and Salesforce hired 24,400 cumulatively in 2013. But in total, cleantech added 6,385 new hires in 2013, accounting for 16 percent of the net new jobs among SV150 firms.

"You don't need a lot of employees to build an app," said Josh Green, a general partner at the venture firm Mohr Davidow Ventures and chair of the National Venture Capital Association. "But when you are disrupting an industry, even with the automated manufacturing of Tesla, you need more capital and people."

But the reverse can happen. Take a look at Tessera Technologies, which last year saw the biggest percent gain in hiring. This year, the San Jose firm tops the list for the biggest percent drop in employees. The company shed slightly more than half its jobs as part of the sale of an entire business segment forced on it by Starboard, a hedge fund investor. And more pain is to come: Tessera said in January that it will cut 300 more out of its existing workforce of 525.

The red hots

Some companies jump out for how fast they are jumping in the rankings.

Facebook leapt five positions in the sales ranking to No. 11. The social networking firm also ranked No. 3 in terms of biggest dollar gain in sales, after Apple and Google.

Then there is Twitter, which went public in October and joins the SV 150 at 67th in terms of sales. Yes, it is ranked No. 1 for biggest net loss. But it is also ranked fifth in terms of biggest percent gain in sales.

And at least before the recent bumpy ride in the stock market, investors were excited about the microblogging firm's future. The company ranked second for its market-value-to-sales ratio, an indication that investors are willing to pay a high premium in share price for each dollar in sales.

Look next at Rocket Fuel of Redwood City, ranked 116th in terms of sales. But the company, which also had its public offering in 2013, accounted for the SV 150's third-biggest percent gain in revenue. Rocket Fuel uses artificial intelligence to place ads on advertising exchanges.

Despite that, the market hasn't loved Rocket Fuel; its shares fell 18 percent over the past year, one of 31 firms on the SV 150 that saw their market value drop.

And if you don't know FireEye, it may be time to brush up.

The data security company, newly public and in the news because of data breaches at retailers like Target, is low on the valley's sales ranking, at 131.

But FireEye, based in Milpitas, ranks sixth behind Twitter for sales growth and ranks fourth behind Tesla for biggest gain in employees with a workforce of 1,678. Like Twitter, FireEye is also in the top 10 for biggest net losers, having reported a net loss of $120 million.

Sure, both Rocket Fuel and FireEye are far from Apple, HP and Google in terms of total sales.

But it's the companies at the bottom of the list that are the ones to watch. Their rocket growth will displace the current tech royalty.

Contact Michelle Quinn at 510-394-4196 and mquinn@mercurynews.com. Follow her at Twitter.com/michellequinn.