Tuesday, October 23, 2007

The Innovation Index Quarterly Earnings On a Roll

The Innovators of The Innovation Index have been on fire since last quarter. Even after returning a whopping 56% through the first three quarters of 2007, they have not cooled off. On the contrary, some of these Innovators are red-hot going into the fourth quarter. Here is a synopsis of their latest quarterly earnings report:

3M (NYSE: MMM)

MMM is up 12% in 2007, closing today at 85.93

"3M checked in with net income of $960 million, or $1.32 per share, compared to $894 million, or $1.18 a share, in the third quarter of 2006. If you back out a one-time item, the company earned $1.29 a share..."

Amazon.com Inc. (NASDAQ: AMZN)

AMZN is up 156% in 2007, closing today at 100.82

"The online retail giant reported earnings of $80 million, or 19 cents a share, for the quarter ended Sept. 30, compared with earnings of $19 million, or 5 cents a share, for the same period last year. Revenue grew 41% to $3.26 billion from $2.31 billion last year. Analysts had expected the company to report earnings per share of 18 cents on revenue of $3.14 billion, according to consensus forecasts from Thomson Financial. The company said operating earnings for the period came in at $123 million -- ahead of the $108 million expected by analysts. Last year's third quarter saw operating income of $40 million."- source MarketWatch

America Movil S.A.B de C.V. (ADR) (NYSE:AMX)

AMX is up 48% in 2007, closing today at 67.10.

"Revenue soared (in the latest quarter), operating results improved solidly and America Movil added more new customers than the 6 million extra clients in the previous quarter...Core earnings before interest, taxes, depreciation and amortization rose 44.6 percent to 31.9 billion pesos. Analysts in the Reuters survey had forecast a 43 percent leap."

Apple Inc. (NASDAQ: AAPL)

AAPL is up 119% in 2007, closing today at 186.16.

"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."

eBay Inc. (NASDAQ: EBAY)

EBAY is up 20% in 2007, closing today at 35.94.

"eBay reported a net loss of $935.6 million, or 69 cents a share, compared with earnings of $280.9 million, or 20 cents a share, for the same period last year. The results include a previously disclosed charge of $1.39 billion related to the company's acquisition of Skype, a provider of voice-over-IP, or VOIP, telephone services that was taken over by eBay in September of 2005. Also included are charges related to stock-option compensation and other items. Excluding the charges, eBay said earnings would have been $564 million, or 41 cents per share, for the quarter. Analysts were expecting earnings of 33 cents a share, according to consensus estimates from Thomson First Call. Revenue grew 30% to $1.89 billion for the quarter from $1.45 billion last year. Analysts had expected revenue of $1.83 billion for the period."

General Electric (NYSE: GE)

GE is up 9% in 2007, closing today at 40.48.

"General Electric Co.'s third-quarter profit rose 7.1 percent on higher sales of locomotives, jet engines and power-plant turbines. The world's second-biggest company by market value narrowed the range of its full-year earnings forecast....Profit from continuing operations climbed to $5.09 billion, or 50 cents a share, from $4.75 billion, or 46 cents, a year earlier, the Fairfield, Connecticut-based company said today in a statement. That matched the estimate of 11 analysts surveyed by Bloomberg. Revenue rose 12 percent to $42.5 billion as Chief Executive Officer Jeffrey Immelt targeted faster-growing markets and sold more equipment than services in booming economies including China and the Middle East."

Google Inc. (NASDAQ: GOOG)

GOOG is up 47% in 2007, closing today at 675.77.

"Google earned $1.07 billion, or $3.38 per share, for the three months ended in September. That was up from net income of $733.4 million, or $2.36 per share, at the same time last year.
If not for the cost of awarding stock to its steadily expanding work force, Google said it would have earned $3.91 per share. That topped the average estimate of $3.78 per share among analysts surveyed by Thomson Financial. Revenue for the period totaled $4.23 billion, a 57 percent increase from $2.69 billion last year. After subtracting commissions paid to its thousands of advertising partners, Google's revenue stood at $3.01 billion - about $70 million above the average analyst estimate."

Intel Corporation (NASDAQ: INTC)

INTC is up 33% in 2007, closing today at 26.80.

"Intel Corp.'s profit leaped 43 percent in the third quarter as cost-cutting, swelling microprocessor demand and a massive restructuring helped the world's largest semiconductor company glide past Wall Street's already-bullish expectations. The Santa Clara-based chipmaker said Tuesday it earned $1.86 billion, or 31 cents per share, in the three months ended in September. That beat by a penny the average estimate of analysts surveyed by Thomson Financial, and it's 43 percent higher than the $1.3 billion, or 22 cents per share, Intel earned in the year-ago period. Intel is profiting from robust worldwide PC sales that are driving up demand for microprocessors, which act as the brains of those computers. Higher sales of microprocessors helped the company offset flat average selling prices. Revenues for the period were $10.09 billion, a 15 percent jump from the $8.74 billion in sales rung up last year."

International Business Machines Corp. (NYSE: IBM)

IBM is up 18% in 2007, closing today at 114.68.

"Strength in services overcame a surprising slide in hardware and helped third-quarter earnings rise 6 percent at International Business Machines Corp., enough to narrowly beat Wall Street expectations Tuesday.From July through September, IBM (NYSE:IBM) earned $2.36 billion, $1.68 per share, surpassing the profit of $2.22 billion and $1.45 per share that the Armonk, N.Y.-based technology bellwether posted in the same quarter of 2006.Earnings per share rose at a much steeper rate than net profit because IBM's aggressive stock buyback plan has taken 130 million shares out of circulation in the past 12 months.Revenue in the third quarter rose 7 percent to $24.1 billion from $22.6 billion a year ago. However, IBM continued to benefit heavily from a weak dollar, because dips in the greenback inflate the dollar value of deals done in other currencies. If not for currency fluctuations, this quarter's rise in revenue would have been 3 percent."

Research In Motion Limited (NASDAQ: RIMM)

RIMM is up 192% in 2007, closing today at 124.53. This makes 2006's impressive Innovation Index leading gains of 94% appear small.

"RIM reported second-quarter earnings of 50 cents per share on revenue of $1.37 billion - slightly above estimates of analysts polled by Thomson Financial. For the third quarter, RIM predicted earnings between 59 cents and 63 cents per share on revenue of between $1.6 billion and $1.67 billion. The company also passed the 10-million subscriber mark during the period, ending the quarter with 10.5 million BlackBerry subscribers."

Southwest Airlines Co. (NYSE: LUV)

LUV is down 7% in 2007, closing today at 14.22.

"Southwest Airlines Co., the nation's biggest discount carrier, said its third-quarter profit rose because the airline packed planes amid strong demand. Net income for the three months ended Sept. 30 rose to $162 million, or 22 cents per share, compared with $48 million, or 6 cents per share, during the same period a year earlier. Analysts polled by Thomson Financial had been expecting earnings, on average, of 21 cents per share."

Yahoo Inc. (NASDAQ: YHOO)

YHOO is up 20% in 2007, closing today at 30.64.

"Still feeling the effects of a major reorganization, Yahoo officials Oct. 16 said third-quarter net income fell 5 percent, to $151.3 million, from $158.5 million in the same period a year earlier. Yahoo, which replaced Terry Semel as CEO with co-founder Jerry Yang and reorganized into three core business segments this year, said third-quarter revenue rose 12 percent to $1.77 billion, from $1.58 billion. Net sales excluding payments Yahoo makes to other sites to acquire traffic were $1.28 billion from $1.12 billion, slightly surpassing the $1.24 billion expected from analysts polled by Thomson Financial."


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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