They might not all be giants, but they're making great strides

By Charles Stein, Globe Staff

The Growth 50

n the best of all possible worlds, you'd like to have a few Microsofts or Cisco Systems in your state, small companies that grow quickly into giants, creating jobs and wealth in the process.

Massachusetts hasn't been that lucky. But a look at our list of the top 50 growth companies shows we have the next best thing: a significant number of small and medium-sized firms that are expanding at a respectable clip. Together they have provided enough momentum to keep the economy moving along at a nice pace.

They are companies such as Biogen Inc. - number one on the growth list - which has seen sales and profits soar since the 1996 introduction of Avonex, a drug that treats the symptoms of multiple sclerosis. And Sapient Corp., which provides custom software to Fortune 500 companies and has grown from two employees in 1991 to 924 this year. And Forrester Research Inc., a public company only since late 1996, which is quickly establishing itself as the leading source of information on electronic commerce.

All three of those companies happen to be based in Cambridge, which suggests the folks over there have something on their minds besides political correctness.

The Growth 50 is based on average annual increases in profit and sales over two years. To be eligible for the list, companies must have had at least $10 million in 1995 sales and $1 million in 1995 profits. They must also have been publicly traded since 1996.

There are two basic ways for a company to get bigger: organically or through acquisitions.

Several of the top-ranked firms on our list chose the second route. TJX Cos. of Framingham grew dramatically by buying the Marshalls chain of department stores. Chicago Miniature Lamp Inc. of Canton bought Sylvania Lighting International, a deal so large the company is changing its name to SLI Inc. to reflect its new status.

Because many of the firms on our list are emerging companies, their progress is not always as smooth as they would like.

Consider the case of number two Benthos Inc. The Falmouth company sells equipment for ocean and undersea exploration. Earlier this year, the company's stock sank to the bottom after it announced disappointing sales and earnings for the final quarter of 1997.

Natural Microsystems Corp., ninth on the growth list, suffered the same fate when it announced last month that its earnings would decline because some of its biggest customers delayed orders.

The Framingham software company's stock lost 35 percent of its value in a single day.

Finally, it is worth saying a word or two about the handful of big companies on our list.

Simple mathematics tells you that as companies get larger, it becomes more difficult for them to boost sales and profits by the 50 or 60 or 80 percent it takes to be a highflying growth company.

Staples Inc., EMC Corp., and State Street Corp. are not growing that quickly.

Still, all three had sales and profit growth of between 20 and 30 percent over the past two years.

And all three did it the old-fashioned way: They earned it by expanding in new markets with new products.

Their success should give all the emerging companies something to shoot for in the years ahead.