Thomas Friedman based his best-seller “The World Is Flat” on the premise that while America was distracted with 9/11 and terrorism, the rest of the world seemed to profit from globalization and its benefits.

This week we pondered the market capitalization of publicly traded language service companies companies and were surprised at how much more valuable British companies are compared to the only U.S. public company. While it’s a tiny sample (that’s another discussion), it got us wondering whether it was because Lionbridge is subject to more strict filing requirements with the Sarbanes-Oxley legislation. Most financial analysts usually bring that up about U.S. firms, but dismiss it as a red herring. Then we thought that it could be because SDL has positioned as a software company rather than a service company. However, that doesn’t explain non-tech RWS’ capitalization.

Whatever the reason, it looks like SDL and RWS are doing the right thing. With their higher market cap to revenue ratios, they have more “currency” with which they can buy other companies in the language market — or beyond, as SDL did when it bought Tridion.

The table below shows a quick and dirty analysis. The market cap is current and the revenues refer back to the 2006 Fiscal Year. SDL and Lionbridge follow the calendar year, while RWS just announced its interim results for the first half of 2007. While we don’t plan another in-depth financial analysis in our series like “Lionbridge 2005: Opportunities and Challenges”, we will continue monitoring the financial state of these and other publicly held companies. Bigger buyers always harbor some concerns about the financial stability of their suppliers, their ability to fund innovation, and their appetite for expanding to meet their growing needs.