IT companies were looking forward to a lively year once the fears of the millennium bug had receded, but the excitement has not always been of the sort they would have desired.

Even the most robust, innovative and financially solid names in the sector have felt the pain of stock market displeasure, as investors have grown disenchanted with missed profit forecasts, over-stretched valuations and the hubris which characterised the short-lived dotcom phenomenon.

Yet, the companies on the list of world's most respected IT companies have generally continued to produce strong results this year and drawn admiring comments from chief executives. All have played - and continue to play - pioneering roles in their segments of the IT market. Two of them, IBM and Hewlett-Packard, have been involved in computing since its earliest days.

Others - notably Microsoft and Intel - have helped to power, and have also profited from, the rise of the PC, while the remainder have risen to prominence more recently in the age of networks and the internet. Sun Microsystems has promulgated the virtues of networking since it was founded in 1982 and both America Online and Yahoo! have risen from nowhere a few years ago to become two of the biggest brands on the internet.

However firm their foundations and reputations may be, though, these companies all face the challenge of operating in an industry subject to rapid and bewildering change. Cisco, for example, has become the ruler of the network equipment roost, but is beset by tougher competition from newer companies coming up from below.

Hewlett-Packard, reinvigorated by the arrival last year of a dynamic new chief executive, Carly Fiorina, recently felt the wrath of the market when it missed Wall Street earnings estimates by a big margin. Its share price slumped and HP was forced, embarrassingly, to abandon its $18bn bid for the consulting practice of PwC.

Oracle, the business software company, has also suffered negative publicity - not because of any operating problems, but through losing two top executives. Ray Lane, its chief operating officer, left this summer, followed last month by Gary Bloom, head of the database arm.

Intel, maker of Pentium chips, has been affected by Wall Street's concern - which the company dismisses - that the highly cyclical semiconductor market is becoming over-supplied and vulnerable to a downturn, while Microsoft was rocked by the US court decision (now being appealed) this summer to split it into two separate companies and restrict its operations.

Looking beyond immediate difficulties, though, prospects for the IT sector appear bright. As more companies develop full e-business strategies and people increasingly go online, demand for IT products and services is set to continue growing steadily. The pace of investment and internet-related consumer spending may not have been as spectacular as hoped after the evaporation of pre-millennium fears, but it is enough to keep revenues growing solidly.

Thus, the CEOs polled for this survey expect most of today's big IT names to be among the world's most respected companies in five years' time. Of the 10 forecast leaders in this future list, only two are outside the areas of IT and electronics. In the 2000 list, there are four such companies.

One factor is common to both lists, however: the domination of US companies in IT. Only one company in the latest list of most respected IT companies - Nortel, the telecoms and network group - is based elsewhere, and then only across the border in Canada. Two of the IT or IT-related names in the overall list looking five years ahead are non-US: Sony of Japan and Nokia of Finland.

Microsoft, the world's dominant software company, appears in the current and future lists and is commended by CEOs for its technology leadership, constant innovation and vision. Cisco, IBM, America Online (now merging with Time Warner) and Intel are on both lists.

Cisco wins plaudits for its rapid growth and successful acquisition record, as well as for the versatility of its products and its intense customer focus. IBM, which was floundering in the early 1990s, gains credit among executives for running with the e-business torch and shifting from a predominantly hardware emphasis to one based mainly on software and services.

Hewlett-Packard is credited with stability and long-term profitability after moving away from its printer heritage. Its focus on e-business also wins respect, as does that of Sun Microsystems, which is a noted opponent of Microsoft and its market dominance.

The corporate youngsters, AOL and Yahoo!, score with CEOs for their persistence and far-sightedness in carving out strong positions in today's new online markets. But all IT companies have had to come to terms with the internet and its implications, as have their customers. Volatility is likely to keep the IT sector, and its investors, on their toes for some time.