It will take more than a problem with antenna reception on the iPhone 4 to affect Apple's brand.
Apple shows just how a brand can survive and thrive even when a parent company stumbles. Apple's sales in the late 1990s plummeted 46% over a four-year stretch while the company lost money seven times over eight quarters. The stock was trading for less than $4 (split-adjusted) in 1997 before company cofounder Steve Jobs, who had been ousted, rejoined Apple.
The following year Apple released the iMac, the first in a string of monster hits over a dozen years. Sales over the past 12 months hit $57 billion, and net income was $12 billion. The stock is up 60-fold since 1997.
To identify the world's most valuable brands we looked at more than 100 with leadership positions in their respective industries. Forbes evaluated these brands along with Jeffrey Parkhurst, managing director of business strategy at Mindshare, a WPP ( WPPGY - news - people )-owned media agency. We required that brands have at least some presence in the United States, because if a brand is to be considered global, it needs to be a player in the United States.
Our first step was to determine earnings before interest and taxes for each brand.Forbes averaged those earnings over the past three years and subtracted from earnings a charge of 8% of the brand's capital employed, figuring a generic brand should be able to earn at least 8% on this capital.
Forbes applied the maximum corporate tax rate in the parent company's home country to that net earnings figure. Next, we allocated a percentage of those earnings to the brand based on the role brands play in each industry. (Brands are crucial when it comes to beverages and luxury goods, but not so much, say, with airlines, when price and convenience are more important.) To this net brand earning number, we applied the average price-to-earnings multiple over the past three years to arrive at the final brand value. For privately held outfits we applied an earnings multiple for a comparable public company.
Tech brands made a big showing on this with 30% of the top 50 brands, including four of the first five places in the rankings. Financial service brands and food and beverage brands each captured six spots. U.S. brands dominated the list.
Most large economies saw output decline in 2009, with the E.U., Japan and U.K. all falling at least 4% (the U.S. economy contracted 2.4%). The brands on our list fared a little better, with sales, on average, flat in 2009. Some brands were hit hard by the economic downturn as well as their own missteps.
Take for example No. 11-ranked Toyota ( TM - news - people ). The brand is worth $24.1 billion, but has been troubled over the past year with multiple recalls that affected a total of 10 million vehicles. Toyota's perceived quality score fell 20% in a survey this spring from Santa Barbara, Calif.-based ALG, which is the industry benchmark for residual values and depreciation data. "Toyota always promoted quality, and then [the recalls showed] they delivered exactly the opposite," says Mindshare's Parkhurst, who argues the fallout would not have been as bad if Toyota's brand promise all these years had to do with, say, horsepower.
Company troubles don't always doom strong brands. Consider Marlboro. Cigarette brands have been on the ropes for years as government restrictions have made it increasingly difficult for tobacco companies to market their products. The settlement signed in 1998 between the four largest tobacco companies and 46 state Attorneys General severely limited tobacco marketing and called for the companies to shell out $206 billion over 25 years to the states to pay for health-care costs.
No tobacco brand has thrived like Marlboro since the settlement. The brand ranks No. 8 on our list, worth $29.1 billion. Marlboro's market share in the U.S. was 33.8% at the time of the settlement; today it's 42.8%, which is greater than the next 12 cigarette brands combined. Marlboro's message has been taken out of mainstream media. The brand, owned by Altria ( MO - news - people ) and Philip Morris International ( PM - news - people ), is now marketed directly to consumers and in places where they gather, with help from a database of the names of 25 million smokers.
The United Way is the only nonprofit that makes our list, coming in at No. 26 with a brand value of $14.3 billion. The United Way was founded in 1887 and is made up of 1,800 local United Way chapters in 45 countries and territories. The economic downturn affected the charity as it did most other nonprofits, and donations fell 9% between 2006 and 2008. Yet with $4 billion in annual donations, the United Way is twice the size of the next biggest charity, the Salvation Army.
United Way of America CEO Brian Gallagher has transformed the century-old charity since he took over in 2002. At that time 50% of local United Ways defined fundraising as their primary objective, with the rest focused on community impact. Today 90% of United Ways are focused on community impact. In 2008 Gallagher announced a new plan to refocus the organization on three core issues: education, income and health, with specific metrics for measuring success in each area.
The value of brand names may soon take on a bigger role on the balance sheets of U.S. companies, according to James Gregory, CEO of CoreBrand, a global brand consulting firm. In the U.S. brands often get lumped in as part of goodwill when companies are bought and sold, but outside the U.S. brands can play a more prominent role on the balance sheet. The increasing calls for a standardized global accounting system present an opportunity for the role of brands on the balance sheet, says Gregory.
Kurt Badenhausen Research by Sarah Pivo and Ritika Sinha.
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In Pictures: The World's Most Valuable Brands
