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Wal-Mart rules again

Wal-Mart wins the battle for No. 1 for the second year in a row, knocking out its chief competitor for the title of America's largest company, Exxon Mobil.

The retail champ earned its place at the top with a staggering $421 billion in sales. And despite softness in the U.S. market and a nagging class action suit alleging sex discrimination that's currently before the U.S. Supreme Court, Wal-Mart's earnings jumped more than 14%, to $16.4 billion.

But while Wal-Mart has bragging rights, the real moneymaker is Exxon Mobil, no. 2 on the Fortune 500 this year. The oil giant rode soaring global oil prices to an astonishing $35.6 billion in profits the most of any company on the list.

Fellow oil giant Chevron rounds out the top three with $196 billion in revenues, up 20%. More good news for Chevron: In March the company learned that it wouldn't have to pay billions in compensation to Ecuadorian citizens' groups who had sued Chevron's precursor company, Texaco, for environmental damage.

Berkshire Hathaway jumped four places on our list, to No. 7. Revenues at the giant holding company rose by 20% to $136.2 billion. This should be some consolation to CEO Warren Buffett, who faced unaccustomed bad press recently after it emerged that heir apparent David Sokol had bought stock in a company that he then urged Berkshire to acquire. (Sokol has since resigned his post at Berkshire.)

There was also action farther down the list, as pharmaceutical stalwart Pfizer moved up nine places, to No. 31. Pfizer's earnings dropped 4.4%, though, and the company's board abruptly replaced CEO Jeff Kindler in December after five years of sluggish stock performance. With its patents for Lipitor and other blockbuster drugs about to expire, Pfizer needs to crank up its innovation engine.

DirecTV (No. 110) jumped six places on the list as revenues rose by almost 12%, to $24.1 billion. Driven by rapid growth in its Latin America division, the pay-TV provider's profits more than doubled. CEO Mike White announced that DirecTV added 1.9 million net new subscribers in 2010, its second-best year ever.

This year's list has a few oddities: Automaker General Motors rose to No. 8, despite having emerged from bankruptcy only in November. And two homebuilders made the list despite a national foreclosure crisis. Then there's that destitute ward of the government, Fannie Mae, which lost more than $14 billion last year but sprang to No. 5 on the 500, ahead of General Electric. Why? Mostly due to new accounting rules.

All told, the Fortune 500 generated nearly $10.8 trillion in total revenues last year, up 10.5%. Total profits soared 81%. But guess who didn't benefit much from this giant wave of cash? Millions of U.S. workers stuck mired in a stagnant job market.

Sure, these corporate profits derived partly from productivity gains, including workforce reductions. And many 500 companies are growing faster overseas than in the U.S. Nevertheless, we've rarely seen such a stark gulf between the fortunes of the 500 and those of ordinary Americans. -The Editors

1. Wal-Mart Stores

Rank: 1 (Previous rank: 1)
Revenues ($ millions): 421,849.0
CEO: Michael T. Duke

Wal-Mart rules the Fortune 500 for the second year in a row and the eighth time this decade beating Exxon Mobil decisively in the battle to be crowned America's largest company.

But things haven't been easy: Sales at its U.S. stores have dropped for seven straight quarters, despite gains in worldwide revenues and profits.

To fight back, CEO Michael Duke is restocking shelves with lower-priced products dropped by his predecessor, Lee Scott. He's also jumping on the anti-obesity bandwagon: Thousands of packaged food items are being reconfigured to cut their salt and sugar content.

2. Exxon Mobil

Rank: 2 (Previous rank: 2)
Revenues ($ millions): 354,674.0
CEO: Rex W. Tillerson

The oil giant may not be the biggest company in the U.S., but it's by far the most profitable: Driven by higher prices for crude as well as big gains in its natural gas and chemicals businesses profits at Exxon Mobil topped $30 billion, a whopping 58% jump.

With its eye on growth, the company recently launched a massive joint venture in Qatar and an offshore well in eastern Russia. It also is making a big push into alternative energies, investing in biofuels and expanding operations designed to cut greenhouse gases.

3. Chevron

Rank: 3 (Previous rank: 3)
Revenues ($ millions): 196,337.0
CEO: John S. Watson

Chevron's got some headaches to deal with: In Nigeria it faces ongoing hostilities from local thugs, and in Ecuador, it's fighting claims that its Texaco unit engaged in toxic-waste dumping.

So why not engage in a little retail therapy? In February, Chevron wrapped up its $3.2 billion acquisition of Pennsylvania's Atlas Energy, adding to its growing portfolio of natural gas operations. It also bought 200,000 acres of the Duvernay shale gas formation in Alberta, Canada. Expect the buying to continue: Chevron says it will boost capital spending 20% this year to $26 billion.

4. ConocoPhillips

Rank: 4 (Previous rank: 6)
Revenues ($ millions): 184,966.0
CEO: James J. Mulva

Conoco stock has been on a tear this past year, rising more than 40%, although it's still off sharply from its 2008 high. What's cheering investors? CEO James Mulva's plan to shed assets more than $15 billion worth in the past 18 months and reduce long-term debt.

The company also plans to drill 150 new oil wells this year in its Eagle Ford project in southern Texas and anticipates hitting peak production of some 65,000 barrels per day in 2013. Mulva's expanding shale operations, too, having added about 90,000 acres in North America last year.

5. Fannie Mae

Rank: 5 (Previous rank: 81)
Revenues ($ millions): 153,825.0
CEO: Michael J. Williams

Sure, it's still living off a lifeline from the federal government. But that hasn't stopped Fannie from leaping into the top 5 this year, up from no. 81. It's mostly new accounting rules, though, that have pushed Fannie so high on the 500.

Indeed, Fannie's troubles are far from over. In April, the SEC began investigating statements then-CEO Daniel Mudd made in 2007 to Congress that may have misrepresented Fannie's health. And FNMA stock has done so poorly that the New York Stock Exchange delisted it last June.