The Innovation Index five-peats – five week of back-to-back gains. The Innovation Index added 3% last week, and is now up 21% for the year. The Innovation Index has already surpassed the 2006 performance, and we are just in May 2007. Could this be the banner year for The Innovation Index? The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 was unchanged, and is up 7% for the year; NASDAQ was unchanged, and is up 6% for the year; the Dow Jones Index lost a fraction, and is now up 8% for the year. This is the fifth week in 2007 where The Innovation Index is having double-digit gains.The Innovation Index closed at 83.54 on May 25, 2007, up 21% from the closing price of 69.31 on December 29, 2006.
What caused The Innovation Index to add another 3% in one week? Five innovators caused the jump, the largest increase coming from Research In Motion Limited - (NASDAQ: RIMM) that went up 10% in just one week, and is now up 30% for the year.
“NetSuite Inc. (www.netsuite.com) and iEnterprises (www.ienterprises.com), announced that iEnterprises and NetSuite will be offering Mobile Edge for NetSuite(R), a wireless application designed specifically for NetSuite customers, so they can easily mobilize NetSuite for use on BlackBerry smartphones from Research In Motion (RIM).” – RIM can boast on-demand software suite on the BlackBerry. RIM also completed the status updates on its financials, and benefited from upgrades.
8 of the Top 20 Innovators showed positive gains (compared to 10 in the previous week), 8 of the Top 20 Innovators showed negative gains (compared to 7 in the previous week), and 4 Innovators were unchanged last week (compared to 3 in the previous week).
Can The Innovation Index six-peat, and have another week of gains? The Innovation Index is on a roll, and knows no stopping.
Weekly Advances
Google Inc. (NASDAQ: GOOG) was up 3% last week and is now up 5% for the year; Google increased the Search Market Share in the U.S. by 1.4% contributing to an additional 100 million additional searches. Google announced an innovative new Translation feature - Google Translate - that automatically provides the results of a search query in your own language from any other language (that Google supports).
Amazon.com, Inc. (NASDAQ: AMZN) was up another 8% in just one week, and is now up a whopping 74% for the year. New innovations, analyst upgrades and short squeeze contributed to the rise.
“Leading online retailer Amazon.com, Inc. (NASDAQ: AMZN) today announced it has acquired Brilliance Audio (www.brillianceaudio.com), the largest independent publisher of audiobooks in the United States. The acquisition will enable Amazon to work closely with the book publishing community to further expand the number of books produced in audio format and provide customers with an even greater selection of audiobooks to find, discover and buy.” “Amazon.com is also planning to launch DRM-Free MP3 music Download Store with songs and albums from EMI Music and more than 12,000 other labels.” “Amazon.com's grocery store launched new Subscribe & Save feature allowing automatic fulfillment of most popular items.” – Amazon is innovating on all cylinders, and these announced innovations will positively impact Amazon’s growth in 2007 and beyond. In particular, the millions of songs that Amazon.com will offer for MP3 music lovers.
Apple Inc. (NASDAQ: AAPL) was up 3% and is now up 34% for the year; there is a huge momentum building for the soon to be launched iPhone, including rampant speculation on the release date, and rollout frenzy. “Prudential reiterated overweight target for Apple, and raised their target on AAPL to $125 from $115 following meetings with the mgmt. The firm says mgmt appeared confident on a number of fronts including 1) its prospects for Mac share growth over time, 2) the potential for iPhone success, and 3) the viability of the iPod platform despite the impending launch of iPhone. The firm says their checks suggest 1) continued momentum for Mac sales, 2) a timely launch of iPhone, and 3) series of new iPod launches beginning as early as June, extending through September.” – All these timely innovations bode well for Apple and Apple investors.
Discount retailer Target Corp. (NYSE: TGT), amid innovations and strength in its credit-card business and better margins, reported an 18% jump in first-quarter profit on Wednesday. Target was up 4% in one week, and is now up 7% for the year.
On a conference call with analysts, Chief Executive Bob Ulrich called the results "excellent," adding that Target's (TGT) share of the market against competitors such as Wal-Mart Stores Inc. (NYSE: WMT), Costco Wholesale (NASDAQ: COST) and Sears (SHLD) climbed to 9%.
According to MarketWatch, for the quarter ended May 5, Target said it earned $651 million, or 75 cents a share, compared with last year's income of $554 million, or 63 cents a share.
Total sales for the Minneapolis-based discounter rose 9.2% to $14.04 billion from $12.86 billion a year ago. Revenues from operations climbed 9% to $13.62 billion while credit-card revenues were up 13% at $418 million. The most impressive data was: Sales at stores open longer than a year, which retailers use to measure growth, rose 4.3%.
The results outpaced Wall Street's expectations for a per-share profit of 71 cents but came up short of a forecast for $14.17 billion in sales.
Target said it still expects to post earnings of $3.60 a share for the full-year period, in line with the average forecast of analysts polled by Thomson Financial. And although quarterly guidance was not offered, CFO Scovanner called analysts' average estimates for the second, third and fourth quarters "respectable."
General Electric Co. - GE (NYSE: GE) introduced 11 new ecomagination products, services and projects, including the world's first hybrid locomotive and the ecomagination Homebuilder Program - a comprehensive package of energy efficient appliances, lighting, advanced building design and real-time energy management combined with a GE mortgage that rewards energy efficiency.
"Customer demand for the most advanced, most fuel-efficient and least emissive technologies is what sparked ecomagination," said GE Chairman and CEO Jeff Immelt. "Increasing demand from our customers is what is making it succeed beyond our expectations.
"Green is happening everywhere across GE," Immelt said. "From our transportation products to renewable energy to clean water to how we make television shows and movies to home building and mortgages, green is truly universal at GE." - GE was up 2% for the week, and importantly, is now in the black for the year – up 1%.
eBay Inc. (NASDAQ: EBAY) “announced an agreement with Sanook!, the leading online portal in Thailand, to launch an e-commerce site that will enable individuals and businesses in Thailand to participate in local trade as well as cross border trade through eBay's global Web sites. Under this revenue-sharing agreement, the co-branded site -- Sanook! eBay -- will be managed and operated under a newly formed Sanook! subsidiary. The Thai-language local site is expected to launch in approximately five to seven months. According to research firm IDC, Thailand currently has more than 16 million Internet users - a figure expected to grow at a compound annual growth rate of 25 percent through 2009. The agreement gives eBay the opportunity to participate and drive economic growth in the region. Once the site is launched, Thailand will be the 38th market where eBay has a local presence.” - Way to go global eBay! eBay was even last week, and is up 9% for the year. I attended TiEcon 2007 the previous weekend, and was inspired by Meg Whitman’s keynote presentation, President and CEO of eBay. Check out: Innovation and Leadership lessons from Meg Whitman, eBay CEO and President, and top Innovator
Weekly Declines
The news of the previous week was Microsoft’s (NASDAQ: MSFT) acquisition of AQuantive (NASDAQ: AQNT). Microsoft hits a walk-off home run with Aquantive acquisition. In last week’s announced innovations: “Microsoft Office SharePoint Server 2007 received U.S. Department of Defense 5015.2 Certification. 'Forza Motorsport 2' raced into living rooms on Xbox 360 worldwide.” – How hot is the Indian business for Microsoft? Ravi Venkatesan, chairman of Microsoft India, in his keynote presentation at TiEcon 2007 believes it is “absolutely red hot”. Opportunities abound everywhere. Microsoft was down 1%, however is up 2% for the year.
Yahoo Inc. (NASDAQ: YHOO) saw the biggest decline at 4% last week, however is still up 12% for the year; the rumors of a potential acquisition by Microsoft fizzled out upon Microsoft’s AQuantive acquisition and subsequent statements suggesting that Microsoft is set in the online ad business.
Yearly Leaders and Laggards
Who sits on the top of The Innovation Index? Amazon.com, Inc. (NASDAQ: AMZN) gained 8% last week and leads all innovators with 74% gains for the year. Apple Inc. (NASDAQ: AAPL) is next up with 34% appreciation for the year. America Movil (NYSE: AMX) stayed even last week to remain at 31% gains for the year. There are five other innovators with double-digit gains for the year, including: 3M Company (NYSE: MMM) at 13%, HP added 2% to grow to 11% (NYSE: HPQ), Intel Corporation (NYSE: INTC) at 10%, RIM (NASDAQ: RIMM) at 30% and Yahoo Inc. (NASDAQ: YHOO) at 12%.
Starbucks Corporation (NASDAQ: SBUX) is down 19% for the year; can Starbucks rally in the second half of the year?
About The Innovation Index
The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.
The Innovation Index has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.
The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.
Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:
3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)
The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.
Disclaimer: I invest in the stocks comprising The Innovation Index.
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