The Innovation Index Strikes Back in 2009

The Innovation Index had a remarkable showing in 2009, gaining 48.65%, and beating S&P 500, Dow Jones and NASDAQ. 17 of the top 20 innovators were in the green. 3 of the top 20 innovators, including Amazon.com (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) had over 100% gains. 16 of the top 20 innovators had double-digit gains. eBay (NASDAQ: EBAY) and Research In Motion (NASDAQ: RIMM) gained over 65% each. America Movil (NYSE: AMX), IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT) gained over 50% each. Only 3 innovators were in the red.

2009 proved that the most innovative companies in USA are not only resilient, but bounce back bigger and faster compared to the general market. The Top 20 innovators performed extremely well, delivering explosive growth in business, profits, innovations, and stock performance.

How will the Innovation Index perform in 2010? Check back in April, 2010 for the quarterly report of the Innovation Index.

Learn about Apple's innovation strategy... How does Apple innovate, and what makes Apple the #1 innovative company in the world? Learn more...

Selected references:
Leading Business Innovation eBook & Resource Kit
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

P&G - Procter & Gamble - Innovating & Growing with Business Model

Did you know that Procter and Gamble - P&G makes all these cool products below that you use everyday in your house?

You betcha... from Duracell and Gillette to Crest, Charmin to Tide, Bounty to Iams - P&G is the world's largest consumer goods company. As a matter of fact, "three billion times a day, P&G brands touch the lives of people around the world." P&G has a bigger mission that they are trying to fulfill: "Provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come."

P&G is one of the Top 20 innovators of the Innovation Index.

P&G stock is doing relatively well compared to the major indexes. Here is a snapshot of how well P&G is holding up since 2007, beating both S&P 500 and Dow Jones indices:

Why is P&G doing so well?

One answer: Innovation. Innovation driving new business, innovation driving growth, innovative leadership by past CEO of P&G A.G. Lafley, & current CEO Bob McDonald. Another fact that most investors may not know about: Barclays Global Investors and Berkshire Hathaway (Warren Buffett's company) are the top two institutional holders of P&G.

P&G has been making or handily beating the earnings estimates for the past 4 quarters (despite the Great Recession):

Earnings History	Dec-08	Mar-09	Jun-09	Sep-09
EPS Est	1.58	0.80	0.79	0.99
EPS Actual	1.58	0.84	0.80	1.06
Difference	0.00	0.04	0.01	0.07
Surprise %	0.0%	5.0%	1.3%	7.1%

(Courtesy - Yahoo Finance)

P&G Revenue & Gross Profit are beginning to climb back (check earnings results below), after divesting major businesses such as the prescription business in 2009 (courtesy - Yahoo Finance). Sales fell in 2008-2009 (yearly sales for June 2009) owing to the recession, divesting of businesses, and P&G's ill-timed strategy of raising prices for its products in the midst of the Great Recession that backfired. The price increases initially helped buoy sales, but eventually sales suffered. P&G is correcting the price increase strategy of 2008 beginning in Q3 of 2009.

PERIOD ENDING		30-Jun-09	30-Jun-08	30-Jun-07
Total Revenue		79,029,000	83,503,000	76,476,000
Cost of Revenue		38,898,000	40,695,000	36,686,000
Gross Profit		40,131,000	42,808,000	39,790,000

P&G Global Business Unit Organization

Courtesy: P&G Quarterly News. PG.com

24 of P&G's brands have more than a billion dollars in net annual sales,^[15] and another 18 have sales between $500 million and $1 billion. (Courtesy - Wikipedia). These P&G brands are run as business units, with brand heads managing the operations, products & profits.

Billion dollar brands

• Ariel is a brand of laundry detergent/liquid available in numerous forms and scents.
• Actonel is a brand of the osteoporosis drug risedronate co-marketed by Sanofi-Aventis.
• Bounty is a brand of paper towel sold in the United States, Canada, and the United Kingdom (rebranded to "Plenty" in the UK after being sold to SCA Svenska Cellulosa Aktiebolaget).
• Braun is a small-appliances manufacturer specializing in electric razors, coffeemakers, toasters, and blenders.
• Crest is a brand of toothpaste.
• Dawn is a brand of dishwashing detergent.
• Downy/Lenor is a brand of fabric softener.
• Duracell is a brand of batteries and flashlights.
• Fusion is a brand of men's wet shave razors and is the quickest P&G brand to have reached $1 billion in annual sales.
• Gain is a brand of laundry detergent and fabric softeners.
• Gillette is a safety razor manufacturer.
• Head & Shoulders is a brand of shampoo body wash, and deodorant.
• Old Spice is a brand of aftershave and shaving cream.
• Ivory is a soap.
• Nice 'n Easy is a hair coloring product.
• Olay is a brand of women's skin care products.
• Oral-B is a brand of toothbrush.
• Pampers is a brand of disposable diaper.
• Pantene is a brand of hair care products (conditioners/styling aids).
• Prilosec OTC is a brand of heartburn medicine co-marketed by AstraZeneca.
• Pringles is a brand of potato chips.
• Puffs is a brand of facial tissue.
• Secret is a brand of antiperspirant and deodorant.
• TAG is a deodorant and body spray.
• Tide is a brand of laundry detergent.
• Vicks is a brand name of over-the-counter medicines (Formula 44, Sinex, NyQuil/DayQuil)
• Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color).
• Whisper is a brand of pantyliners sold primarily in Asian markets.

Global Products A to Z

Most of these brands, including Bounty, Crest, Pringles, Puffs, and Tide, are global products available in several continents. Procter & Gamble products are available in North America, Latin America, Europe, the Middle East, Africa, and Asia.

How did P&G do in the latest quarter?

"The Procter & Gamble Company (NYSE:PG) reported net sales of $19.8 billion for the July - September quarter which exceeded the Company's guidance. Organic sales growth was up two percent versus a guidance range of flat to minus three percent on better than expected results across most business segments. Diluted net earnings per share increased three percent to $1.06, above the Company's guidance range of $0.95 to $1.00. The Company raised its outlook for the October - December quarter and fiscal 2010 organic sales growth citing modestly higher expectation for market growth. The Company also increased the low end of its fiscal year guidance range by $0.03 per share to reflect the higher top-line growth projection." - Courtesy PG.com Quarterly Press Release.

"Our September quarter results give us encouragement we are making the right choices to grow market share profitably," said President and Chief Executive Officer Bob McDonald. "We are investing in innovation, expanding our portfolio and improving consumer value to serve more consumers, in more parts of the world, more completely. We are driving simplification and improving execution while leveraging scale to create cost efficiencies that help fund these investments and accelerate growth."

What is sexy, new and exciting that P&G is innovating?

P&G recently introduced Cascade Complete All-in-1 ActionPacs.

Cascade Complete All-in-1 ActionPacs "give you the confidence of a job done right. It breaks down, dissolves, and rinses away tough food particles without the need to pre-wash."

Here is what one highly satisfied P&G customer had to say about All-in-1 ActionPacs:

OMG this is the most amazing product

"I have an older dishwasher that came with the apartment I live in. You had to completely wash the dishes before putting them in the dishwasher. I was basically using it to drain the dishes. I saw this on T.V. and went to walmart and got it. All I can say is it is almost magical the way it cleans. I tested it on several hard to wash dishes, dried oatmeal, dried rice krispy cereal and my stainless steel pots and everything came out clean, no stuck on food, no hard water residue. thank you! thank you! thank you! what a time saver. I am disabled and one of the hardest things to do is standing over the sink washing dishes."
By beadjeannie. Reviewer from Fresno, CA August 14, 2008

Marketing Machine

According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than any other company; the $2.62 billion spent by P&G is almost twice as much as that spent by General Motors, the next company on the Nielsen list.^[5] P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival.^[6]

Bottomline:

P&G is a great company with great leadership and employees, and highly satisfied customers. P&G will be around for the next 100 years. P&G will continue to grow high single digits even in this economy because of the breadth of its products, creativity and innovation, global market share, and delighted repeat customers who will not buy another brand. When P&G made increases in product prices to bolster revenue & profits - as high as 16 percent because of higher costs for plastic, energy, and paper in 2008 - consumers reacted and bought less of P&G products, and sales fell. P&G changed strategies in Q3 2009 to react to the price-conscious buyers & accommodate frugal shoppers: "Company leaders say they are cutting prices about 10 percent of their global product line, stepping up promotions such as coupons and other discounts, and making more “value” pitches to consumers." P&G also announced a new plan for its laundry business, slashing the price of Cheer detergent by 13 percent and promoting it as a bargain brand. In CEO McDonald's words: "the focus on innovation, expanding our portfolio and improving consumer value" are keys to P&G's continued growth.

Download my Creativity and Innovation eBook. 212-page collection of over 55 best practices, case studies, and insights on the current state of Creativity and Innovation in Business at Top Innovators including Apple, Google, Netflix, 3M, Frito Lay, Johnson & Johnson, Proctor & Gamble, Toyota, GE, BMW, Deloitte, Southwest, Nike, IBM, Dell and more. "Your report from the eBook and definitive guide was the primary reference that we used." Used by over 500 leading organizations including HP, Pepsi, EDS, J&J, Nokia ... Learn more
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Selected references:
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

Innovation Index Reports

Introducing The Innovation Index
Annual Report 2007 - The Innovation Index gains 66%
Measuring Business Innovation Success
Q1 2008 Report - Innovation Index ahead of S&P 500
Q2 2008 Report - Top Innovators Deliver
Top 50 Innovative Companies in the world
Annual Report - Chapter One - Total Innovation Activity
Annual Report - Chapter Two - The Top Innovator
Annual Report - Chapter Three - The Innovation Insights
Innovation and Stock Performance Correlation
Future earnings guidance, A leading indicator
Smart Investing In Tough Economic Times
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies

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.

Originally published in 2008; republished in with major revisions in 2009.

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 iPhone Goes Global

Steve Jobs, Apple CEO, launched the highly anticipated super fast iPhone 3G at the Apple Developer Connection yesterday. The new iPhone will be available for sale on July 11, 2008.

Apple Inc. (NASDAQ: AAPL) is one of the Top 20 Innovators of the Innovation Index.

The biggest surprise in the Apple announcement: iPhone 3G is available at half the price of the original iPhone at only $199 for the 8GB model in the U.S., and $299 for the 16GB model. And the new iPhone 3G packs twice the punch - it is twice as fast.

The new iPhone 3G packs a powerful mix of new features:
1. Built-in GPS for expanded location based mobile services with real-time mapping and tracking the progress with GPS technology
2. iPhone 2.0 software which includes support for Microsoft Exchange ActiveSync - Push Email, Contacts, Calendar - and runs the hundreds of third party applications.
3. Simultaneously browse the web, get map directions, or check your email while the call is on.
4. New App Store, providing iPhone users with native applications in a variety of categories including games, business, news, sports, health, reference and travel.
5. MobileMe™, a new Internet service that pushes email, contacts, and calendars from an online “cloud” to native applications on iPhone, iPod® touch, Macs and PCs.

More importantly, the new iPhone 3G will be available in 70 countries in 2008, with 22 countries launching it on July 11. iPhone already ships with iPod, Internet, and a host of cool phone features.

Bottomline:

Apple iPhone 3G is poised to become a global phenomenon owing to lower entry costs, 3G technology, and enhanced features including corporate emails. With the iPhone 3G availability in all the continents, including the fast growing markets in Asia, established markets in Europe, emerging markets in Latin America and South America and other markets, iPhone is poised to eclipse the 10 million mark in 2008. Innovation Index Group had earlier estimated that Apple will sell 12 million new iPhones in 2008. Innovation Index Group raises the estimates based on the launch of the new iPhone 3G: Apple will sell over 13 million iPhones in 2008, and over 25 million iPhones in 2009. The lower price will result in a slight decline in Apple net earnings. However, the topline growth will compensate for the bottomline in 2009.

Apple iPhone will cannibalize the sales of iPods at these price points. Innovation Index Group believes that iPod sales will either remain flat year over year, or even decline with the introduction of the new iPhone unless Apple reduces the iPod prices further. Innovation Index Group had earlier talked about how Apple can turnaround the iPod sales growth. One of the suggestions made was that Apple should provide iPods for free with sales of new Macs - now Apple has started doing this for the students. Apple has a huge business in iPods. Apple needs to at the very least maintain this business, while it surges forward with the iPhone business.

Innovation Index Group has long-term BUY recommendations on the Top 20 Innovators of The Innovation Index with price target of $235 to $250 for Apple in Q4, 2008.

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:

Invest in 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

Costco Continues Solid Double-Digit Growth

Costco Wholesale (NASDAQ: COST) is a Top Innovator at A Great Value

Costco Wholesale Corporation (NASDAQ: COST) is one of the Top 20 Innovators of The Innovation Index. Costco was added to The Innovation Index for 2008. Innovation Index Group rates Costco a Long-term Buy with Q4, 2008 price target of $80. Costco shares are up 1.4% year to date, and beat Dow Jones, NASDAQ and S & P 500 by a good margin.

Costco reported net sales of $5.54 billion for the month of April, the four weeks ended May 4, 2008, an increase of 12 percent from $4.94 billion in the same four-week period last year.

For the first thirty-five weeks of its reporting period ended May 4, 2008, the Company reported net sales of $46.88 billion, an increase of 12 percent from $41.90 billion during the similar thirty-five-week period last year.

Comparable sales growth for the four-week and thirty-five-week periods ended May 4, 2008, were as follows:

4 Weeks 35 Weeks -------------- --------------
US 7% 5%
International 14% 17%
Total Company 8% 8%
============== ==============

The U.S. comparable sales figure includes, among other things, the effect of gasoline price inflation, with the average sales price per gallon of gasoline up 17% for the four-week month of April, as compared to the year-earlier April. Excluding gasoline price inflation, U.S. comparable sales would have been up 5%. In addition, foreign exchange rates, primarily in Canada, positively impacted international comparable sales results. On a local currency basis, international comparable sales increased 6% in April.

Costco Innovations
Costco has grown its lead in key retail segments by offering great prices, convenience, and "treasure hunt" shopping atmosphere. In 2007, Costco generated $456 million of U.S. Fine Wine sales, racked up $1.9 billion in TV sales, had a growing electronics business, showed substantial increase in diamond business with sales of 105,000 carats, sold over $550 million of Seafood, grew the chicken business from practically nothing to $173 million, provided 27.9 million prescriptions through its pharmacy, sold over 2.4 million pairs of glasses, processed 1.3 billion prints through the One Hour photo service, and sold 69.3 million hotdog and sodas. What are the new innovative growth segments? Costco Gas, Costco Car Wash, Costco.com (online business), Costco Travel and Costco Home. Costco Home promises to provide high-end name brand furnishings for a home at the lowest price. We believe some of these new innovations from Costco will provide 2% to 5% incremental revenue and earnings growth in 2008 and beyond, and potentially grow into higher growth business segments in 2009.

Innovation Index Group rates Costco a Long-term Buy with Q4, 2008 price target of $80.

Bottomline:

Costco will be announcing its quarterly earnings on May 29. Innovation Index Group believes that the current valuation of Costco around $70 to $71 a share provides an attractive buying opportunity. Costco will continue its solid double-digit earnings and revenue growth through the rest of 2008.

The Innovation Index Fund Manager, that invests in Costco, is up 6% in 2008. The Top 20 Innovators of The Innovation Index have rebounded well in the 2nd quarter of 2008 to cause The Innovation Index Fund Manager to have positive gain for the year.

Innovation Index Group believes that the U.S. economy will recover significantly in the 2nd half of 2008, and the Top Innovators of The Innovation Index will reward the patient, long-term investor.

Innovation Index Group has BUY recommendations on the Top 20 Innovators of The Innovation Index.

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 an annual compounded average gross 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 a private placement investment partnership organized under the California state regulations.

The Innovation Index Reports:

Invest in 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

Related Articles:
Consumer Innovation Best Practices
Creativity And Innovation Best Practices

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 On A Tear - Up more than 50% in 3 months

Apple Inc. (NASDAQ: AAPL) shares have run up more than 50% during the last three months.

Apple is one of the Top 20 Innovators of The Innovation Index.

What is driving the stock price?

1. Apple had an impressive second quarter earnings that beat the Wall Street estimates handily. Apple is poised to continue the earnings momentum in 2008, and beyond. How big has Apple revenue grown over the previous five years? About 300%.

2. Mac business is solid as a rock, growing 50% year over year. Apple has just rolled out new versions of iMac clocking over 3 GHz. And Apple is gaining ground in the laptop segment with the MacBooks.

3. iPhone business is strong, and Apple is on track to sell 10 million or more iPhones in 2008 - we estimate over 12 million. Some estimates track iPhone sales of over 5 million already in 2008.

Apple is introducing the all new iPhone 2.0 aka iPhone 3G next month. Further, Apple has created alliances all over the world to sell millions more iPhones.

Four mobile operators in the Asia-Pacific region introduced partnerships with Apple to bring the iPhone to their regions later this year. SingTel in Singapore, Bharti Airtel Ltd. in India, Globe Telecom Inc. in the Philippines and Optus in Australia. SingTel owns Optus and holds a 30.5 percent stake in Bharti and 44.5 percent in Globe. SingTel has about 2.3 million mobile subscribers in Singapore and around 7 million in Australia, according to data as of Dec. 31, 2007. Bharti currently has about 64 million subscribers, while Globe reported a 21.3 million mobile subscriber base for the quarter ended March 31. Potential Available Subscriber base for the iPhone: Over 95 million.

The top mobile phone operator in Latin America, America Movil SAB, (NYSE: AMX), another Top 20 Innovator, also announced plans to deliver the iPhone to its region. America Movil has 159.2 million subscribers in 16 countries, including Argentina, Brazil, Chile, Colombia and Mexico.

Apple has also signed deals with Rogers Communications Inc. to sell the device in Canada; Milan-based Telecom Italia SpA to sell the iPhone in Italy; and Vodafone Group PLC, the world's biggest mobile company by sales, to sell it in a total of 10 countries, including Australia, India, Italy and Turkey.

Finally, Apple sells iPhone with AT&T Inc. (NYSE: T), another Top 20 Innovator, in the United States, O2 in Britain, T-Mobile in Germany and France Telecom's Orange wireless arm in France.

In short, Apple has available subscriber base in the hundreds of millions for the iPhone - now it's a matter of time before Apple launches the new 3G iPhone, and potentially expands the market for the iPhone to tens of millions a year beginning in 2009.

The Innovation Index Fund Manager, that invests in Apple, is up 10% in 2008. The Top 20 Innovators of The Innovation Index have rebounded well in the 2nd quarter of 2008 to cause The Innovation Index Fund Manager to have double-digit gain for the year.

Innovation Index Group believes that the U.S. economy will recover significantly in the 2nd half of 2008, and the Top Innovators of The Innovation Index will reward the patient, long-term investor.

Innovation Index Group has BUY recommendations on the Top 20 Innovators of The Innovation Index, and price target of $235 - $250 for Apple in Q4, 2008.

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 a private placement investment partnership organized under the California state regulations.

The Innovation Index Reports:

Invest in 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

Amazon.com, Apple, AT&T, McDonald's, 3M and Microsoft - Innovators Earnings Report

Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), AT&T (NYSE: T), McDonald's (NYSE: MCD), 3M (NYSE: MMM) and Microsoft Corporation (NASDAQ: MSFT) delivered solid results, and either met or beat the first quarterly earnings. These are six of the Top 20 Innovators of The Innovation Index.

Amazon.com "Net sales increased 37% to $4.13 billion in the first quarter, compared with $3.02 billion in first quarter 2007. Operating income increased 36% to $198 million in the first quarter, compared with $145 million in first quarter 2007. Net income increased 30% to $143 million in the first quarter, or $0.34 per diluted share, compared with net income of $111 million, or $0.26 per diluted share, in first quarter 2007." - Solid results at Amazon. Amazon.com showed the street that it can grow the revenue and grow the income at the same time.

New innovations at Amazon.com:

-- Kindle selection continues to grow - with more than 115,000 titles now available, up from 90,000 at launch.

-- Amazon Web Services (AWS) launched Elastic IP addresses and the ability to provide compute instances in multiple zones; over 370,000 developers have registered to use AWS, up more than 35,000 from last quarter.

-- Newly launched TextBuyIt (www.textbuyit.com) service lets customers use text messages to find and buy products sold on Amazon.com.

Business highlights at Amazon.com:

-- The number of sellers using Fulfillment by Amazon increased by more than 50% compared with fourth quarter 2007.

-- Worldwide Media sales grew 28% to $2.54 billion in first quarter 2008, compared with $1.99 billion in first quarter 2007.

-- Worldwide Electronics & Other General Merchandise sales grew 56% to $1.48 billion in first quarter 2008.

Apple Inc. "announced financial results for its fiscal 2008 second quarter ended March 29, 2008. The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. Apple revenue increased by 43%, and net profit increased by 36%. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter's revenue.

Apple shipped 2,289,000 Macintosh(R) computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 1,703,000" -
Great Earnings Report from Apple. Although Apple had provided a very conservative quarterly forecast in January, 2008, Apple beat the high end estimates on revenue, and came on the high end estimates on earnings. Apple once again gave a conservative outlook for the future. The street should get an idea now. Mac business is solid. iPod volume business is stalling, however Apple is selling higher priced iPods. iPhone business is strong, and Apple is on track to sell 10 million or higher iPhones in 2008.

AT&T's "revenues totaled $30.7 billion, up 6.1 percent versus reported results in the year-earlier quarter and up 4.6 percent compared with first-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues. This marks a substantial step up from year-over-year pro forma revenue growth of 2.9 percent in the fourth quarter of 2007 and 1.7 percent in the first quarter of 2007.

AT&T's reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007."

AT&T delivered strong wireless growth in the first quarter, reflecting the company's high-quality network, innovative services, attractive handset selection, extensive sales reach and continued improvements in operations.

Of particular interest was "an accelerated Ramp in AT&T U-verse TV Services. Growth in AT&T U-verse TV service, the company's next-generation IP-based video service, continued its strong ramp during the first quarter, achieving a net subscriber gain of 148,000 to reach 379,000 in service. AT&T expects a further ramp in the quarters ahead and is on track to reach its target of more than 1 million subscribers by the end of 2008. Total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 264,000 in the quarter to reach 2.6 million."

AT&T is using scale to an advantage, and also creating new innovations such as U-verse TV to attract new buyers and grow into new markets. AT&T had a good quarter, and provided a conservative outlook.

McDonald's reported the following first quarter highlights:

-- Global comparable sales increased 7.4%
-- Growth in consolidated Company-operated and franchised restaurant
margins for the ninth consecutive quarter
-- Consolidated operating income increased 24% (16% in constant
currencies)
-- Earnings per share were $0.81, up 31% versus $0.62 in 2007, and
included $0.05 per share of currency benefit

McDonald's surprised everyone with the strong global growth. For the quarter, Europe and Asia/Pacific, Middle East and Africa both delivered double-digit revenue and operating income growth. McDonald's is a growth business, and expect 2008 is poised to be an excellent year for the Big Mac.

3M announced first-quarter sales of $6.5 billion, an increase of 8.9 percent over last year. Net income was $988 million, or $1.38 per share, versus $1.4 billion, or $1.85 per share in the first quarter of 2007. Included in first quarter 2007 results are net gains of $422 million, or $0.57 per share, from the sale of the company's branded pharmaceuticals business in Europe, net of other various special items (a-c). Excluding the impact of these items, first quarter 2008 earnings per share increased 7.8 percent.

Key 3M highlights:

Industrial and Transportation
-- Sales increased 17.1 percent to $2.1 billion.

Health Care
-- Sales rose 12 percent to $1.1 billion.

Safety, Security and Protection Services
-- Sales of $859 million, up 13.4 percent.

3M gave a modest guidance for the rest of 2008, but "reiterated its 2008 earnings expectations. The company continues to expect full-year 2008 earnings to increase a minimum of 10 percent over 2007 earnings-per-share of $4.98, which excludes special items." 3M met the earnings estimates; however, the weak outlook drove down 3M shares during the week.

Finally, Microsoft announced third-quarter revenue, operating income and diluted earnings per share of $14.45 billion, $4.41 billion and $0.47, respectively. Microsoft surprised the street with mild earnings and mild outlook, whereas in January of 2008, Microsoft had given a strong guidance. Microsoft client division revenue that sells Windows Vista and Windows XP came in below the mid-range of the expectations, and the business division also stalled from last year. The street reacted by a corresponding decrease in share price. Although, if one looks under the hood, there are many positives in Microsoft's earnings.

Entertainment and Devices revenue for the quarter grew 68% over the comparable period last year driven by robust demand for Xbox 360 consoles. Cumulative console sales surpassed 19 million during the quarter, up 74% from a year ago. Server and Tools revenue growth of 18% added to its string of consecutive double-digit revenue growth quarters, which now stands at 23.

Would Microsoft turnaround and create a strong growth in the 2nd half of 2008? Would the proposed merger with Yahoo help Microsoft's business or distract it from executing?

Is Apple winning marketshare against Windows Vista? Apple had a strong surge in Mac business. Can Apple reclaim the position, slowly but surely, in the PC business? Apple has a really long way to go.... but if Apple can get to the 10% marketshare of the overall PC business worldwide, this would mark a significant milestone and signal a shift.

Innovation Index Group has BUY Recommendations for AAPL, AMZN, MCD, MMM, MSFT and AT&T.

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 has generated a gross average annual return of 40%.

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 a private placement investment partnership organized under the California state regulations.

The Innovation Index Reports:

Invest in 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

References:
Company Press Releases

The Top 50 Innovative Companies in the World - Apple is #1 4th year in a row

Rank	Company	HQ Country	HQ Continent	Revenue Growth 2004-07* (in %)	Margin Growth 2004-07* (in %)	Stock Returns 2004-07** (in %)			Most Known for its Innovative... (% who think so)
1	APPLE	USA	North America	47	69	83			Products (52%)
2	GOOGLE	USA	North America	73	5	53			Customer Experience (26%)
3	TOYOTA MOTOR	Japan	Asia	12	1	15			Processes (36%)
4	GENERAL ELECTRIC	USA	North America	9	1	3			Processes (43%)
5	MICROSOFT	USA	North America	16	8	12			Products (26%)
6	TATA GROUP	India	Asia	Private	Private	Private			Products (58%)
7	NINTENDO	Japan	Asia	37	4	77			Products (63%)
8	PROCTER & GAMBLE	USA	North America	16	4	12			Processes (30%)
9	SONY	Japan	Asia	8	13	17			Products (56%)
10	NOKIA	Finland	Europe	20	2	35			Products (36%)
11	AMAZON.COM	USA	North America	29	-11	28			Customer Experience (33%)
12	IBM	USA	North America	1	11	4			Processes (31%)
13	RESEARCH IN MOTION	Canada	North America	56	-1	51			Products (37%)
14	BMW	Germany	Europe	6	-5	11			Customer Experience (40%)
15	HEWLETT-PACKARD	USA	North America	10	17	35			Processes, Business Models, and Customer Experience (27% each)
16	HONDA MOTOR	Japan	Asia	12	6	14			Products (40%)
17	WALT DISNEY	USA	North America	6	14	7			Customer Experience (63%)
18	GENERAL MOTORS	USA	North America	-2	NA***	-11			Products (55%)
19	RELIANCE INDUSTRIES	India	Asia	31	-7	94			Business Models (31%)
20	BOEING	USA	North America	9	32	21			Products (63%)
21	GOLDMAN SACHS GROUP	USA	North America	30	6	28			Processes and Business Models (33% each)
22	3M	USA	North America	7	5	3			Products (45%)
23	WAL-MART STORES	USA	North America	10	-2	-2			Processes (48%)
24	TARGET	USA	North America	11	3	0			Customer Experience (67%)
25	FACEBOOK	USA	North America	Private	Private	Private			Customer Experience (51%)
26	SAMSUNG ELECTRONICS	South Korea	Asia	2	-14	8			Products (42%)
27	AT&T	USA	North America	43	6	23			Customer Experience (33%)
28	VIRGIN GROUP	Britain	Europe	Private	Private	Private			Customer Experience (47%)
29	AUDI	Germany	Europe	11	11	41			Products (50%)
30	MCDONALD'S	USA	North America	7	-7	25			Customer Experience (42%)
31	DAIMLER	Germany	Europe	-11	37	28			Products (35%)
32	STARBUCKS	USA	North America	23	-2	-13			Customer Experience (60%)
33	EBAY	USA	North America	33	-37	-17			Business Models (28%)
34	VERIZON COMMUNICATIONS	USA	North America	12	0	9			Services (41%)
35	CISCO SYSTEMS	USA	North America	20	-5	12			Products (35%)
36	ING GROEP	Netherlands	Europe	7	4	11			Services (41%)
37	SINGAPORE AIRLINES	Singapore	Asia	9	5	20			Customer Experience (55%)
38	SIEMENS	Germany	Europe	1	21	22			Products (41%)
39	COSTCO WHOLESALE	USA	North America	11	-5	14			Customer Experience (46%)
40	HSBC	Britain	Europe	12	-1	4			Services (39%)
41	BANK OF AMERICA	USA	North America	12	0	0			Customer Experience and Services (23% each)
42	EXXON MOBIL	USA	North America	11	7	25			Processes (50%)
43	NEWS CORP.	USA	North America	4	4	4			Business Models (47%)
44	BP	Britain	Europe	14	-5	11			Processes (42%)
45	NIKE	USA	North America	8	-1	14			Customer Experience (43%)
46	DELL	USA	North America	7	-12	-17			Business Models (37%)
47	VODAFONE GROUP	Britain	Europe	7	-21	15			Business Models (33%)
48	INTEL	USA	North America	4	-10	6			Products (53%)
49	SOUTHWEST AIRLINES	USA	North America	15	9	-9			Customer Experience (50%)
50	AMERICAN EXPRESS	USA	North America	3	1	3			Customer Experience (35%)

2008 Report

BusinessWeek/Boston Consulting Group (BCG) recently announced the world's top 50 innovative companies for 2008.

17 of the Top 20 Innovators of The Innovation Index are included in the top 50 innovative companies of the world by BusinessWeek/BCG. This is a testament to the Innovation Index methodology and the process.

There are many new entrants in 2008. The top five innovators from last year have strengthened their positions further, and remain in the top five slots this year also. Apple is #1 for the fourth time in a row owing to another innovation milestone: Apple iPhone (check our sister blog: http://appleinnovation.blogspot.com ) Google is #2 again owing to the growth of the AdWords and AdSense businesses, and the phenomenal growth of YouTube videos post acquisition (although Google is still trying to find the appropriate business model towards making money from the millions of videos served daily). Toyota Motor remains at #3 in large part due to the dominance of hybrid cars - Toyota has expanded its position further by introducing hybrid cars in all the major car lines besides Prius, General Electric remains at #4 due to the emerging alternative energy innovations, and Microsoft rounds at #5, due to the growth of the XBox and new consumer innovations - can Microsoft retain its number 5 position in 2009?.

Tata Group - India vaults into the Top Ten innovative company list for the first time at #6. Tata was not in the top 50 innovative company list last year. Tata recently boldly acquired Jaguar and Land Rover from Ford. Although the big reason Tata is in the top ten is owing to the introduction of Tata Nano, a $2,500 new car that will revolutionize the car industry. Nintendo, at #7, is the top innovator out of Japan, thanks to the runaway success of Wii. Proctor & Gamble fell one notch to #8, but stayed in the Top Ten innovators list. P&G is a perennial innovator, and figures to be in Top Ten for the foreseeable future owing to hits such as Febreze and Mr. Clean. Another Top Ten innovator went up a notch to #9 - Sony. Sony's Blu-Ray and new product mix is causing a turnaround. Rounding out the Top Ten is Nokia out of Finland. Nokia went up 3 places and surged back in the Top Ten list. Nokia is the heavyweight in wireless, and the new Nokia models are doing rather well.

General Motors is on a comeback with exciting new electric concept cars, and remarkable new vehicles in the Buick, Hummer, Cadillac and Saturn lines. GM is on a rebound, and could have a solid 2008-2009 if it embraces the alternative energy engine technologies for the new cars. BMW, Honda Motor, Audi and Daimler are also in the top 50 innovator list on the strengths of new innovative cars that are customer friendly and in tune with the present environment. Reliance Industries, another Indian innovator, vaults into the Top Twenty list of innovators. Reliance is a household name in India - from wireless to telecommunications, technology to infrastructure - Reliance can be found in virtually every industry in India. There are key companies shining in this year's list out of England including Vodafone, BP, HSBC, and Virgin Group. Overall, 2008 list of innovators is very well-represented globally.

#25 on the list is Facebook - a new innovator who has the sixth highest trafficked website on social networking - who can one day challenge Google and MySpace.com. Although Facebook still has a long way to go.

According to BusinessWeek, "2008 list of the World's Most Innovative Companies adds three financial measures to the mix to determine the rankings. For this year's list, votes cast in the proprietary BusinessWeek-BCG survey received 80% of the overall weighting, stock returns were weighted 10%, while three-year revenue and margin growth each got 5%. While these changes -- only votes from our survey counted in the past -- marked the biggest shift yet in our rankings of the World's Most Innovative Companies, there are some similarities to previous years."

2007 Report

BusinessWeek announced (external link) the top 50 innovative companies of the world, an annual ranking compiled along with Boston Consulting Group. Click here to view the Top 50 rankings. Listed below is the 2007 Top 50 Innovative companies in the world, along with their 2006 ranking comparison.

Apple Inc. (NASDAQ: AAPL) is #1 again, 3rd year in a row. Google Inc. (NASDAQ: GOOG) is #2 again. And climbing up one notch is Toyota at #3. General Electric (NYSE: GE) is #4, up 2 places; Microsoft (NASDAQ: MSFT) held steady at #5, Proctor & Gamble (NYSE: PG) went up 1 spot to #6, 3M (NYSE: MMM) went down 4 notches to #7, Walt Disney Co (NYSE: DIS) zoomed up a whopping 35 places to #8, IBM (NYSE: IBM) went up 1 place to #9, and Sony climbed 3 places to #10.

There are many new innovators in the BusinessWeek top 50. AT&T (NYSE: T), Citigroup (NYSE: C), Verizon (NYSE: VZ), Nintendo (Japan), Volkswagen (Germany), Best Buy (NYSE: BBY), Merck (NYSE: MRK) and News Corporation (NYSE: NWS) are your new companies. Besides, Royal Philips Electronics (Netherlands), Costco Wholesale (NASDAQ: COST), Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Amgen (NASDAQ: AMGN), McDonald's Corporation (NYSE: MCD), and LG Electronics (South Korea) have vaulted into the top 50 rankings (in 2006, these companies were ranked in the top 100, outside the top 50). This means, a few innovators dropped out of the top 50.



Last year (December 2006), I started The Innovation Index of the top 20 innovators based on 2006 BusinessWeek rankings of North American companies and my own research. I had only included the top 25 publicly traded North American companies in The Innovation Index based on the BusinessWeek rankings so as to evaluate their innovation activity and stock performance on a weekly basis. I am now planning to revise The Innovation Index for 2008 based on this new ranking from BusinessWeek, and am considering including the global publicly traded Innovators - the likes of Toyota, Sony, Nokia, BMW, Samsung, Philips, Infosys (although Infosys was not included in the Top 50 this year), top innovator from China, and more - besides the North American Innovators. This would create the first global Innovation Index for 2008.

How did BusinessWeek come up with the Top 50 Innovative Companies ranking?

According to the BusinessWeek article:
"The BusinessWeek-Boston Consulting Group 2007 list of the World’s Most Innovative Companies is based on a senior management survey about innovation and was distributed electronically to executives worldwide in late 2006. In October, surveys were sent to the 1,500 largest global corporations, determined by market capitalization in U.S. dollars, with instructions to send the survey to their top 10 executives in charge of innovation. The survey was also distributed to senior management members of the BusinessWeek Market Advisory Board, an online panel consisting of BusinessWeek readers, and via the Knowledge@Wharton e-mail newsletter. Survey participation was voluntary and anonymous, and the survey closed in March, 2007. The survey consisted of 20 general questions on innovation and an optional 12 questions focused on innovation metrics.

A total of 2,468 executives answered the survey. Of those indicating their location, 77% were from North America, 12% were from Europe, and 9% were from Asia or the Pacific region. A larger share of North American voters this year may explain some movement in the rankings of some companies on our list."

Compare this to 2006 BusinessWeek rankings, wherein only 1,070 executives answered the survey, although the mix was globally representative - 46% were from North America, 30% from Eurpoe, and 16% from Asia and Pacific.

In 2007, out of the top 50 innovative companies, only 14 were outside North America; in 2006, 20 companies were outside North America. Perhaps this has to do with the executives answering the survey, and their representative global mix.

Regardless, the top 50 innovators in the world are world-class companies creating new innovations through unmatched creativity and driving profitable growth.

Creativity And Innovation in Business Definitive Guide is a 212-page collection of my handpicked 56 Creativity and Innovation best practices, case studies, articles, interviews, and insights on the current state of innovation in business. The Innovation eBook provides real-world examples on how the Top 50 Innovators including Apple, Google, GE, Proctor and Gamble, Yahoo, Toyota, Netflix, BMW, Deloitte, Timex, Frito Lays, Johnson & Johnson, Starbucks, Southwest Airlines, Microsoft, Intel and more innovate and grow their business successfully time and again, especially during trying times. Use this eBook as a guide and relevant resource to find and create game-changing innovations, unblock creativity, and make innovation successful at your business...Learn more

The Innovation Index Reports:
Introducing The Innovation Index Fund - The Innovation Index Fund introduction announcement
Top 50 Innovative Companies in the world - 2007 & 2008 Report on Top 50 Companies and Innovators
The Innovation Index closes 2007 with 66% gain, crushes major U.S. indices - 2007 Annual Report
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, and would have returned 174% over the previous five years (2002-2006). 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 - (NYSE: 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.

Additional Labels:
top 5 innovative companies
innovative companies
top innovative companies
top companies on innovation and creativity
innovation and creativity top 50
creativity and innovation in business
top 10 creative and innovative companies
top 10 innovator
top 100 innovative business
top 10 innovative companies
top 50 innovative companies

Originally published: May 11, 2007
Updated: April 22, 2008, May 21, 2009
*Past performance does not guarantee future returns