Research In Motion and Nike continue torrid growth, show no slowdown

NIKE, Inc. (NYSE: NKE) and Research In Motion Limited (NASDAQ: RIMM) are 2 of the Top 20 Innovators of The Innovation Index.

Research In Motion Quarterly Revenue rises 107%, Quarterly Net Income zooms 116% year over year.

RIM Revenue for the first quarter of fiscal 2009 was $2.24 billion, up 19% from $1.88 billion in the previous quarter and up 107% from $1.08 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 82% for devices, 13% for service, 3% for software and 2% for other revenue. During the quarter, RIM shipped approximately 5.4 million devices.

Approximately 2.3 million net new BlackBerry(R) subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was over 16 million.

Net income for the quarter was $482.5 million, or $0.84 per share diluted, compared with net income of $412.5 million, or $0.72 per share diluted, in the prior quarter and net income of $223.2 million, or $0.39 per share diluted, in the same quarter last year.

Revenue for the second quarter of fiscal 2009 ending August 30, 2008 is expected to be in the range of $2.55-$2.65 billion. Net subscriber account additions in the second quarter are expected to be approximately 2.6 million. Earnings per share for the second quarter are expected to be in the range of $0.84-$0.89 per share diluted.

Nike delivers yet again, and stays with the high growth trajectory.

For the fiscal year, Nike revenues grew 14 percent to $18.6 billion, compared to $16.3 billion last year. Net income increased 26 percent to $1.9 billion, compared to $1.5 billion last year, and diluted earnings per share increased 28 percent to $3.74 versus $2.93 last year. For the fourth quarter, revenues increased 16 percent to $5.1 billion, compared to $4.4 billion for the same period last year. Fourth quarter net income increased 12 percent to $490.5 million, compared to $437.9 million in the prior year, and diluted earnings per share increased 14 percent to $0.98, versus $0.86 last year.

Future Orders

The Company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June 2008 through November 2008, totaling $8.8 billion, 11 percent higher than such orders reported for the same period last year.

Bottomline:

Both RIM and Nike are showing no slowdown from the U.S. economy. Both provided cautious future earnings outlook to account for potential slowdown in their U.S. earnings; however, the Wall Street analysts reacted to this realistic outlook gravely, and posted negative sentiment about the same. Both companies are still growing strong, and even their outlook shows solid top line revenue growth. RIM in particular slightly lowered the future net earnings owing to higher marketing costs attributed to launch of new products. Nothing unusual. However, the analysts are always seeking the smallest sign of weakness, and blowing it out of proportion. Nike also talked about weaker growth in the U.S. markets. And the same thing. Analysts reacted negatively to this. And their negative comments caused these stocks to go in a free fall, and even helped the market go down (it did not help that oil hit $140 a barrel). Both innovators are showing strong growth, and are not slowing down any time soon. Perhaps these Wall Street analysts need to get real, and revise their estimates in line with the U.S. economy and its impact on the global economy. I applaud both RIM and Nike management to provide conservative outlook. In time, the analysts and the investors will realize that both these companies are real gems, and will repeat the strong revenue and earnings growth. For now, the smart investor will get ample buying opportunity for these two top innovators.

Innovation Index Group has long-term BUY recommendations on the Top 20 Innovators of The Innovation Index, including RIM and Nike.

About Innovation Index Group:

Innovation Index Group, Inc. is a new investment management company focused on systematically identifying, tracking and investing in the most innovative publicly traded companies in North America – collectively called the Innovation Index. We have developed the Innovation Index Fund, LLC as our first vehicle to invest in the Innovation Index. Over the past six years, the Innovation Index would have generated a gross average annual return of 40% based on historical model.* The Innovation Index returned 66% in 2007*, and the Innovation Index Fund Manager is up 10% in 2008.*

Innovation Index Group, Inc. and Innovation Index Fund LLC are registered California Corporations, and member of the Irvine Chamber of Commerce in Orange County. Further, Innovation Index Fund LLC is an investment management company organized under the California state regulation, and is registered with Department of Corporations and SEC Regulation D.

The Innovation Index Reports:

Learn about The Innovation Index - Innovation Index Fund tracks The Innovation Index
The Innovation Index closes 2007 at 66% - 2007 Annual Report on the Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Innovative Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance

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 returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.*

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

Apple and Microsoft - Ain't No Stopping Their Stupendous Growth

Apple Inc. (NASDAQ: APPL) and Microsoft Corporation (NASDAQ: MSFT) are two of the top 20 Innovators of The Innovation Index. Both innovators are growing unabated with new innovations.

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America, and has returned a whopping 56% in 2007 (as of Q3, 2007).

Today Apple announced that it has sold two million Copies of Mac OS X Leopard in just the first weekend, "far outpacing the first-weekend sales of Mac OS X Tiger, which was previously the most successful OS release in Apple's history. Sales included copies sold at Apple's retail stores, Apple Authorized Resellers, the online Apple Store(R), under maintenance agreements and bundled with new Mac(R) computers. "

Leopard is the sixth major release of Mac OS X and is packed with more than 300 new features.

"Early indications are that Leopard will be a huge hit with customers," said Steve Jobs, Apple's CEO. "Leopard's innovative features are getting great reviews and making more people than ever think about switching to the Mac."

Leopard has many key innovations including the Time Machine, "an effortless way to automatically back up everything on a Mac; a redesigned Finder that lets users quickly browse and share files between multiple Macs*; Quick Look, a new way to instantly see files without opening an application; Spaces, an intuitive new feature used to create groups of applications and instantly switch between them; a brand new desktop with Stacks, a new way to easily access files from the Dock; and major enhancements to Mail and iChat(R)."

Apple Inc.'s (AAPL) fourth-quarter net income improved to $904 million, or $1.01 a share, from a year-earlier profit of $542 million, or 62 cents a share. Sales rose to $6.22 billion from $4.84 billion. Analysts, according to Thomson Financial, expected a quarterly profit of 86 cents a share and revenue of $6.07 billion...Among the quarter's highlights were sales of 2.16 million Macintosh PCs and 1.11 million iPhones. Apple had the most amazing launch of the all new iPhone, and this holiday season could be a blockbuster for the iPhone and Apple revenues. The latest iPod Touch could also rake in huge sales.

Apple is firing on all four cylinders: iPod, iPhone, Macintosh PCs and Leopard.

On October 25, 2007, Microsoft reported 27% revenue growth (over last year) on sales of $13.76 billion for the quarter ended September 30, 2007, and the "fastest first quarter since 1999". Further, the operating income and EPS growth exceeded 25% over the same quarter last year. Operating income, net income and diluted earnings per share for the quarter were an astonishing $5.92 billion, $4.29 billion and $0.45, respectively.

"This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999," said Chris Liddell, chief financial officer at Microsoft in the press release. "Operating income growth of over 30% also reflects our ability to translate revenue into profits while making strategic investments for the future."

Microsoft’s businesses of Client, Microsoft Business Division, and Server and Tools grew combined revenue in excess of 20%, and experienced robust demand for Windows Vista, the 2007 Microsoft Office system, Windows Server, and SQL Server.

"Customer demand for Windows Vista this quarter continued to build with double-digit growth in multi-year agreements by businesses and with the vast majority of consumers purchasing premium editions," said Kevin Johnson, president of the Platform and Services Division at Microsoft.

During the quarter, Microsoft’s two consumer focused divisions passed milestones with the successful close of the company’s largest ever acquisition, aQuantive, and Halo 3 achieving the biggest entertainment launch day in history. (Halo 3 launch eclipsed all previous video games and movie launches)

Importantly, Microsoft raised the guidance for the quarter ending December 31, 2007:
Revenue is expected to be in the range of $15.6 billion to $16.1 billion.
Operating income is expected to be in the range of $5.9 billion to $6.1 billion.
Diluted earnings per share are expected to be in the range of $0.44 to $0.46.

It is safe to assume that barring any major change in the world economy, both Apple and Microsoft are expected to have an outstanding 2007, and 2008. The fact that both companies have a significant and growing percentage of international revenues make them resilient to potential changes in local economy and yet provide them the wheels for continued expansion and growth. Apple and Microsoft - ain't no stopping their stupendous growth.

SOURCE
Apple Inc.
Microsoft Corporation

The Innovation Index rises to 13%, doubles lead over major U.S. indices - Weekly Report 05-04-07

Another week, another increase in the lead for The Innovation Index. The Innovation Index added 2% last week, and is now up 13% for the year. The Innovation Index easily crushes the major U.S. indices by more than 100%, including the S & P 500, NASDAQ and Dow Jones. S & P 500 gained 1% during the week, and is up 6% for the year; NASDAQ gained 1%, and is also up 6% for the year; the Dow Jones Index gained another 1%, and is tied at 6% for the year. This is the second week in 2007 where The Innovation Index is up to double-digit gains.


The Innovation Index closed at 78.12 on May 4, 2007, up 13% from the closing price of 69.31 on December 29, 2006.

What caused The Innovation Index to add another 2% in one week? Four innovators caused the jump, the largest increase coming from Yahoo! Inc. (NASDAQ: YHOO) that went up 9% in just one week owing to buyout or merger rumors with Microsoft Corp (NASDAQ: MSFT), so as to compete against the search market leader Google Inc. (NASDAQ: GOOG). In post market action, the buyout rumors seem to have fizzled and it appears that Yahoo and Microsoft may be headed towards a strategic partnership instead.

13 of the Top 20 Innovators showed positive gains (compared to 15 in the previous week), 6 of the Top 20 Innovators showed negative gains (compared to 3 in the previous week), and 1 Innovator was unchanged last week (compared to 2 in the previous week).

Can The Innovation Index three-peat, and have another week of gains? We will find out next week.

Weekly Advances

Besides the large weekly gain for Yahoo, three other innovators gained 5% each in one week including 3M Company (NYSE: MMM), Cisco Systems, Inc. (NASDAQ: CSCO), and Microsoft Corporation (NASDAQ: MSFT). Yahoo stock is back in 20+% territory. 3M is still reverberating from the solid quarterly financial results and the stock buyback program. 3M is now up 9% for the year. Cisco gained owing to positive earnings anticipation (earnings are out next week), and is back in the black - +2% gains for the year. Finally, Microsoft is also back in positive territory owing to 5% jump in one week owing to a better than expected quarter. Microsoft is up 3% for the year now. General Electric Co. (NYSE: GE) made a comeback, notched 4% gain in one week, and is now unchanged for the year. GE had a solid quarter; however, investors have taken their time to reward GE’s performance.

Weekly Declines

Starbucks Corporation (NASDAQ: SBUX) had a good second quarter.

“Fiscal Second Quarter 2007 Highlights:

-- Consolidated net revenues of $2.3 billion, an increase of 20 percent
-- Net earnings of $151 million, an increase of 18 percent
-- Net earnings per share of $0.19, compared to $0.16 per share, an increase of 19 percent
-- 560 retail store openings
-- Comparable store sales growth of four percent, versus most difficult quarterly comparison this year
-- International segment revenue increased by 30 percent”

Starbucks reported an 18.5 percent rise in quarterly earnings “helped by hundreds of new stores and demand for new products including hot breakfast sandwiches and a sugar-free version of its popular Cinnamon Dolce latte.”

Starbucks even announced a new share buyback authorization of 25 million shares.

However, the unimpressed investors sold off, resulting in a loss of 4% in just one week, and the stock going down 13% for the year. The investors were apparently looking for higher same store sales growth in the U.S.

Yearly Leaders and Laggards

Who sits on the top of The Innovation Index? Amazon.com, Inc. (NASDAQ: AMZN) leads all innovators with 60% gains for the year. Amazon.com also announced that its board had approved a $500 million stock buyback over the next two years. Is stock buyback a good company strategy for creating new innovations? You decide. America Movil (NYSE: AMX) notched another percentage to rise to 21% gains for the year. Yahoo! Inc. (NASDAQ: YHOO) is also tied at 21% gains. Apple Inc. (NASDAQ: AAPL) gained 2% last week, and is up 19% for the year.

Starbucks Corporation (NASDAQ: SBUX) is down 13% for the year.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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.

The Innovation Index races to 11%, crushes U.S. major indices – Weekly Report 04-26-07

The Innovation Index mounted a huge comeback last week, gained 6% in just one week, and is now up 11% for the year. The Innovation Index easily crushes the major U.S. indices, including the S & P 500, NASDAQ and Dow Jones. S & P 500 gained 2% during the week, and is up 5% for the year; NASDAQ gained 2%, and is up 6% for the year; the Dow Jones Index gained 2%, and is up 5% for the year. This is the first week of 2007 where The Innovation Index is up to double-digit gains.



The Innovation Index closed at 76.87 on April 26, 2007, up 11% from the closing price of 69.31 on December 29, 2006.

What caused The Innovation Index to have this steep rise? Four innovators caused the jump, the largest increase coming from Amazon.com, Inc. (NASDAQ: AMZN) that went up a dizzying 41% in just one week, and is up 59% for the year! WOW! Amazon.com is the first innovator to cross the venerable 50% stock performance gain in 2007.

15 of the Top 20 Innovators showed positive gains (compared to 8 in the previous week), only 3 of the Top 20 Innovators showed negative gains (compared to 7 in the previous week), and 2 Innovators were unchanged last week (compared to 5 in the previous week). What a difference a week makes!

Weekly Advances

The week belonged to Amazon.com for the stellar stock performance gain in one week: 41% in just one week, and 59% for the year.

“Amazon reported a profit of $111 million, or 26 cents a share, compared with $51 million, or 12 cents a share, in the year-earlier period. Sales rose 32% to $3.02 billion from $2.28 billion. Wall Street was expecting earnings of 15 cents a share on sales of $2.92 billion, according to analysts polled by Thomson Financial.” – Amazon has performed remarkably well in 2007 owing to the innovations introduced in 2006. Last week, I had reported: “Amazon.com analysts are bullish about the first quarter earnings and 2007 performance.” Perhaps some of the investors picked up on this, and invested into the Amazon.com earnings and profited.
Apple Inc. (NASDAQ: AAPL) had another strong performance for the quarter, and the shares jumped to a new all-time high after the company reported an 88% surge in second-quarter earnings. Whereas 2006 was the year of the iPod, 2007 is shaping up to be the year of the iMac and iPhone.

“For the quarter ended March 31, the company said earnings for the quarter came in at $770 million, or 87 cents a share, compared to earnings of $410 million, or 47 cents a share, for the same period last year. Sales for the quarter grew more than 20% to hit $5.26 billion for the period ended March 31. Analysts were expecting earnings of 64 cents a share on revenue of $5.17 billion for the quarter, according to estimates from Thomson Financial. During the quarter, the company said it shipped more than 10.5 million iPods, its popular digital music player. More than 1.5 million units of its Macintosh computer line were also shipped during the period.” – Some of the improvement in margins came from "very favorable" pricing for components - memory in particular. Absent from Apple’s earnings announcement was an update on Apple TV, and the initial sales. The consumers and investors alike are waiting for the launch of iPhone in June 2007.

Google is building its lead on Yahoo!, MSN and AOL. Google Inc. (NASDAQ: GOOG) reported revenues of $3.66 billion for the quarter ended March 31, 2007, an increase of 63% compared to the first quarter of 2006 and an increase of 14% compared to the fourth quarter of 2006. Google is on a tear. Google Non-GAAP net income in the first quarter of 2007 was $1.16 billion, up 69% compared to 2006. Google-owned sites generated the highest revenue growth, brought in $2.28 billion, growing 76% from last year – this means Google’s core business is strong. Google shares are now up 4% for the year. Google also announced acquisition of Marratech software.

IBM (NYSE: IBM) “announced first-quarter 2007 diluted earnings of $1.21 per share from continuing operations, an increase of 12 percent as reported, compared with diluted earnings of $1.08 per share in the first quarter of 2006. First-quarter income from continuing operations was $1.8 billion compared with $1.7 billion in the first quarter of 2006, an increase of 8 percent. Total revenues for the first quarter of 2007 of $22.0 billion increased 7 percent (4 percent, adjusting for currency) from the first quarter of 2006.” IBM had a solid quarter showing double-digit earnings growth. IBM innovations in service and delivery are taking hold.

“3M Company (NYSE: MMM) shares made their biggest one-day gain in about a year, growing 4.5%, owing to earnings that jumped 52% to $1.37 billion, or $1.85 a share, from $899 million, or $1.17 a share, in the year-earlier period. Although, the latest results reflect a net gain of $422 million, or 57 cents a share, from the January sale of its European branded drugs business, restructuring charges and environmental liabilities. The company said earnings excluding special items totaled $946 million, or $1.28 a share, easily topping analyst forecasts of $1.12 a share. Revenue at the St. Paul, Minn., company swelled 6.1% in the three months ended March 31 to $5.94 billion, also beating forecasts of $5.68 billion, as polled by Thomson Financial.” 3M is showing organic growth, and surprised the consumers and investors alike.

“Microsoft Corp. (NASDAQ: MSFT) fiscal third-quarter profit surged 65%, beating Wall Street estimates, as the company benefited from sales of heavily marketed new products including the Vista operating system and Office 2007. The world's biggest software maker reported earnings of $4.93 billion, or 50 cents a share, in the period ended March 31, compared with $2.98 billion, or 29 cents a share, during the year-earlier period. Revenue rose 32% to $14.4 billion. Analysts surveyed by Thomson Financial had expected Microsoft to post earnings of 46 cents a share on revenue of $13.89 billion.” – Microsoft had projected conservative growth for Vista and Office; however, the results show that the market has adopted them rather well, perhaps even surprising Microsoft. “Microsoft's Client division, which includes Vista, reported $5.27 billion in sales for the quarter, compared with $3.15 billion in the period a year earlier. The business division, which includes Office 2007, reported revenue of $4.83 billion for the third quarter, compared with $3.6 billion in the period a year earlier.” Microsoft also provided a healthy guidance for 2008. Microsoft shares are up in after hours trading today.

Weekly Declines

Southwest Airlines Co. - (NYSE: LUV) reported its first quarter 2007 results. “Net income for first quarter 2007 was $93 million, or $.12 per diluted share, compared to $61 million, or $.07 per diluted share, for first quarter 2006. Economic net income for first quarter 2007 was $33 million, or $.04 per diluted share, compared to $64 million, or $.08 per diluted share, for first quarter 2006. This economic net income result is in line with First Call's mean estimate of $.04 per diluted share for first quarter 2007. (Refer to the reconciliation in the accompanying tables for further information regarding economic results.)

First Quarter 2007 Financial Highlights:

-- Record first quarter revenues of $2.2 billion, up 8.9 percent
-- Economic net income of $33 million, down 48.4 percent
-- Economic net income per diluted share of $.04, down 50 percent…”
Although Southwest had a record quarter, and showed profits, the net income went down 48.4 percent owing to rising fuel costs. Southwest shares were down 6% on the news, and are now down 5% for the year.

Yearly Leaders and Laggards

Who sits on the top of The Innovation Index? Amazon.com, Inc. (NASDAQ: AMZN) leads all innovators with 59% gains for the year. America Movil (NYSE: AMX) is showing a strong 20% gains owing to another good quarter. “America Movil’s first-quarter net profit soared 52.5% year-on-year to 15.80 billion pesos ($1.45 billion), or MXN0.45 a share, on the back of strong revenue growth and higher margins. The market was expecting net profit of MXN11.50 billion, or MXN0.33 a share, according to the median forecast of 10 analysts surveyed by Dow Jones Newswires. America Movil added nearly 6.5 million wireless subscribers in the quarter, bringing its total to 131.2 million, of which 44.8 million were in Mexico.” Apple Inc. (NASDAQ: AAPL) is up 17% for the year.

Starbucks Corporation (NASDAQ: SBUX) is down 10% this year. Starbucks is announcing earnings next week.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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.

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.

The Innovation Index retreats to 4%, ties U.S. major indices – Weekly Report 04-19-07

The Innovation Index dropped 3% in the last two weeks, and is now up 4% for the year. The Innovation Index is tied with two major U.S. indices, including the S & P 500 and NASDAQ. S & P 500 gained 2% in the last two weeks, and is up 4% for the year; NASDAQ gained 1%, and is also up 4% for the year; the Dow Jones Index gained 2%, and is up 3% for the year. Has The Innovation Index cooled off after beating the U.S. major indices for several weeks?



The Innovation Index closed at 72.25 on April 19, 2007, up 4% from the closing price of 69.31 on December 29, 2006.

What caused The Innovation Index to drop freely? Three innovators caused the slide, the largest drop coming from Yahoo! Inc. (NASDAQ: YHOO) which shed a whopping 14%, followed by Research In Motion (RIM) (NASDAQ: RIMM) (TSX: RIM) which dropped 9%. Apple Inc. also went down 5%. Overall, only 8 of the Top 20 Innovators showed positive gains (compared to 16 in the first week), 7 of the Top 20 Innovators showed negative gains (compared to 1 in the first week), and 5 Innovators were unchanged last week (compared to 3 in the first week).

Weekly Advances

Were it not for innovators including Intel Corporation (NYSE: INTC) that had the best two weeks in over a year gaining 11% (and now up 8% for the year), Amazon.com, Inc. (NASDAQ: AMZN) that gained 7%, and Dell Inc. (NASDAQ: DELL) that climbed 6%, The Innovation Index may have lost further ground.

“Intel net earnings for the period rose to $1.61 billion, or 27 cents a share on a 1% decline in sales to $8.85 billion. Wall Street was looking for earnings of 22 cents a share on sales of $8.9 billion. Intel's gross margin was 50.1%, down from 55.1% a year ago.” Intel profit benefited from a one-time tax gain of 5 cents a share. Intel provided a healthy 2007 outlook. Intel rival AMD posted a huge loss of $611 million. Is Intel mounting a comeback versus AMD? Can Intel become the disruptor again?

Amazon.com analysts are bullish about the first quarter earnings and 2007 performance.

Dell was up to even territory, and is now only down 1% for the year. Is Dell back for good? Perhaps too soon to tell, but analysts are feeling comfortable with Dell turnaround. Although according to Gartner, HP (NYSE: HPQ) has widened the worldwide lead over Dell. HP’s first quarter PC shipments grew 29%, whereas Dell’s fell by 8%, giving HP 17.6% of the global market, compared to Dell’s 13.9%. How soon can Dell turnaround Dell?

Weekly Declines

Yahoo! Inc. led all innovators for the first quarter of 2007. As recently as the April 05 Innovation Index report, I had written: “Yahoo leads all innovators with 25% gains for the year, and we are only in April. At this rate, can Yahoo gain 50% in 2007? It is quite possible.” What happened to Yahoo? Yahoo profits for the first quarter fell short of analyst expectations as expenses rose, profits were down 11% from 2006, sales only grew 9%, and the outlook did not excite the analysts. All these led to 14% drop. The analysts and investors are not providing Yahoo! any time and room for Project Panama and the new search to show impact. Adding salt to the injury was Google Inc. (NASDAQ: GOOG), another top innovator, which just announced the earnings today after market close; Google profits were up 69% compared to 2006, and net sales up 66%. Google stock is up in after hours. More on Google earnings and comparison to Yahoo in next week’s report. I had written a column on “Can Yahoo! catch Google?” in March. The current quarterly reports show a widening gap between Google and Yahoo in revenue, profits, growth and outlook. Has Google delivered a knockout punch to Yahoo! with DoubleClick acquisition? Yahoo is still up 8% for the year.

Blackberry maker Research In Motion Limited (NASDAQ: RIMM) went down 9% despite a record quarterly earnings, surging revenue growth of 66% over 2006, and good outlook – RIM is suffering from too much of a good thing as the analysts are overly optimistic about its future. Blackberry service suffered an outage that raised more alarms.

Finally, Apple Inc. (NASDAQ: AAPL) was down 5% after deciding to hold off the release of Leopard until October 2007. Apple announced that it is trading off Leopard for iPhone for now. Analysts and Investors did not take this kindly. Sure revenue from Leopard versus potential revenue from iPhone? Could Apple have delivered a big blow to Windows Vista when Vista was vulnerable by the timely release of Leopard? Dell just announced that it will offer Windows XP to customers if they so decide.

Yearly Leaders and Laggards

We have a change in yearly leaders for the first time in 2007. Amazon.com, Inc. (NASDAQ: AMZN) and America Movil (NYSE: AMX) lead all innovators with 13% gains for the year. eBay Inc. (NASDAQ: EBAY) has a solid 10% gain for the year. eBay quarterly results beat estimates, earnings were up 59% from 2006, and the outlook was favorable. eBay's PayPal business showed strong growth. Can eBay grow on this results with new innovations?

Starbucks Corporation (NASDAQ: SBUX) is down 13% this year. Starbucks needs a good earnings report to halt the slide.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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.

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.