(FORTUNE Magazine) – When Cisco CEO John Chambers assured rattled investors earlier this year that annual sales growth would eventually return to the 30% to 50% range, he was essentially saying, "Trust me. Give me your money and I will do wondrous things with it." A few people did. Had they read FORTUNE's annual guide to America's greatest wealth creators last year, however, they might have had second thoughts about his money-spinning abilities. The list showed that a full 95% of Cisco's then-$53-a-share stock price was already reflecting those very expectations--future growth that Cisco had yet to produce. When the growth failed to appear, the stock collapsed.

That plunge erased some $156 billion in shareholder wealth, earning Cisco the dubious distinction of having destroyed more wealth in 2001 than any other company on our list. (Over its lifetime, however, Cisco has still made plenty for investors; it ranks No. 11 overall.) Cisco was by no means alone: U.S. companies managed to do away with a staggering $2.5 trillion in the first ten months of 2001.

That's just one of the chilling statistics unearthed by FORTUNE's ninth annual wealth creators list, compiled by consulting firm Stern Stewart. The guide answers one of the most crucial questions in business: Is management creating or destroying wealth for its shareholders? Topping this year's cumulative ranking, once again, is General Electric, which has produced $312 billion over its lifetime. AT&T brings up the rear, having destroyed $94 billion.

To get these figures, Stern Stewart first determines the "market value added" of America's 1,000 largest companies (as measured by market capitalization). Essentially, MVA is the difference between what investors can now take out of a company and what they have put in over time. It's calculated by assessing the total value the market places on all of a company's outstanding stock and bonds, and then subtracting the capital invested over the life of the company--equity and debt offerings, retained earnings, and bank loans.

For that number to be as big as possible, companies must churn out profits each year. To measure those profits, Stern Stewart uses what it considers a more accurate gauge than the conventional accounting earnings found on a financial statement: "economic value added," or EVA. That takes net operating profit after tax (NOPAT) and then subtracts the cost of capital used to generate the profit.

We can then use MVA and EVA to look at stock valuations, as we did with Cisco. First, Stern Stewart figures what a company would be worth if it were to continue producing last year's NOPAT forever. Then it subtracts that figure from the company's actual market value. The difference is the "future growth value," or FGV. That's the market's estimate of what a company's future growth is worth today, and is best viewed as a percentage of current market value--check the last column, which we dub the "Sanity Test."

So what does this year's list tell us? For one thing, even though trillions of dollars in wealth have been destroyed, stocks still don't look cheap. Oracle, Cox Communications, and Qualcomm, for instance, each have FGV ratios well above 80%. There are, however, several major companies with negative ratios--Ford Motor, Sears, FleetBoston Financial, and Boeing to name a few. Essentially, the market has written them off, expecting no future growth whatsoever. A little negativity is understandable. But no growth? Ever? Perhaps the pessimism is overdone. After all, if this list reminds us of anything, it's that the market doesn't always get it right.

GREAT EXPECTATIONS

The pressure is on. Not only does General Electric's new chief executive, Jeffrey Immelt, have to live up to the uber-manager reputation of his predecessor, Jack Welch, but he must also deliver on the enormous expectations that are built into GE's stock price. According to the figures on our list, 68% of GE's current share price is based on expectations of future growth. And so far, not so good. While GE once again ranks as the top wealth creator over its lifetime, in the current year the company was actually the third-biggest wealth destroyer (after Cisco and EMC): It vaporized a full $114 billion of market value in 2001. That's one number Immelt won't want to increase next year.

NO ONE BUYS IT

Many investors seem to have pronounced Big Tobacco--at least as represented by Philip Morris--D.O.A. This year, like last, America's largest tobacco producer is the only company among the top 20 wealth creators to have a negative future growth value ratio. That means that investors have absolutely no hope that the company will create wealth in the future; shareholders apparently believe their dollars will simply, um, go up in smoke as cigarette makers slowly get stubbed out. So far, however, Philip Morris (soon to be known as Altria, if shareholders agree) hasn't lived up to all the pessimism. The stock has surged 30% in the past year, and the company has added some $6.1 billion in economic value, the most of any company on our list. And with a future growth value ratio of -8%, the market still isn't counting on much growth. The obvious question: Is it wrong once again?

MIGHTY DESTROYER

Just five years ago, General Motors had a perennial lock on the No. 1,000 slot on our list. Now that honor goes to AT&T. What do the two companies have in common? Michael Armstrong, for one. Armstrong ran the Hughes Electronics division while parent GM plowed through billions of dollars of investors' money. But that pales in comparison to what he has done at AT&T. By overpaying for one acquisition after another--TCI and MediaOne, to name two--and instituting a series of botched restructurings, he has managed to eat through $139 billion in shareholder wealth since taking over in late 1997.

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