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Friday, April 25, 2008

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

Friday, April 18, 2008

Google Rises To Dizzying Heights

Google Inc. (NASDAQ: GOOG) announced the quarterly earnings yesterday after market close. Google blew away the earnings, topped the analyst estimates, and importantly, shook off the investor worries about Google's revenue and earnings growth. There were many doubts going into Google's earnings announcement - whether Google can sustain the market share, whether AdWords is producing enough clicks, whether Google can continue the torrid growth. Google erased these doubts in one swift announcement, and investors who were on the sidelines rejoined Google's party.

Google Inc. (NASDAQ: GOOG) is one of the Top 20 Innovators of The Innovation Index. Innovation Index Group has a BUY recommendation for Google with Q4, 2008 price target between $675 to $745.

Google shares are up 21.40% in one day at $545.90 currently. Google shares are still down 22% for the year after today's run up.

What were the earnings specifics?

"Google reported revenues of $5.19 billion for the quarter ended March 31, 2008, an increase of 42% compared to the first quarter of 2007 and an increase of 7% compared to the fourth quarter of 2007.

GAAP operating income for the first quarter of 2008 was $1.55 billion, or 30% of revenues. This compares to GAAP operating income of $1.44 billion, or 30% of revenues, in the fourth quarter of 2007.

GAAP net income for the first quarter of 2008 was $1.31 billion as compared to $1.21 billion in the fourth quarter of 2007.

Non-GAAP EPS in the first quarter of 2008 was $4.84, compared to $4.43 in the fourth quarter of 2007."

Which Google properties showed strength?

Google Sites Revenues - Google-owned sites generated revenues of $3.40 billion, or 66% of total revenues, in the first quarter of 2008. This represents a 49% increase over first quarter 2007 revenues of $2.28 billion and a 9% increase over fourth quarter 2007 revenues of $3.12 billion.

Google Network Revenues - Google’s partner sites generated revenues, through AdSense programs, of $1.69 billion, or 33% of total revenues, in the first quarter of 2008.

International Revenues - Revenues from outside of the United States totaled $2.65 billion, representing 51% of total revenues in the first quarter of 2008, compared to 47% in the first quarter of 2007 and 48% in the fourth quarter of 2007.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 20% over the first quarter of 2007 and approximately 4% over the fourth quarter of 2007.

Google performed rather well globally, and the all important Paid Clicks continued the upward growth with a 4% increase from the last quarter of 2007. This was perhaps the measure that most investors were worried about. Ultimately, a growth in search market share should translate into an equitable growth in Paid Clicks. The Paid Clicks growth does represent a 56% drop from previous quarter's growth of 9% (Google Paid Clicks had grown 9% in last quarter of 2007 from the third quarter of 2007). Is the Google Paid Clicks growth slowing? Would Google Paid Clicks go back to greater than 5% growth quarter over quarter once Google begins growing Search market share and make the Paid Clicks engine even more efficient?

Bottomline:

Google delivered. Google also consummated the DoubleClick acquisition in March 2008. The Top 20 Innovators of the The Innovation Index have been delivering on their earnings - IBM, eBay, Intel, Research In Motion, Nike, Best Buy have all met or beat their quarterly earnings. Whereas the market was upbeat after their earnings announcements, the market is exuberant today. The major U.S. indices are up about 2% today. Google has quenched the investor sentiments today, and if the overall U.S. economy improves in the 2nd half of 2008, watch out! Can Google be a $1,000 stock in 2009? If Google continues this growth trajectory, why not? Only time will tell.

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:

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 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.
*Past Performance Does Not Guarantee Future Results

References:
Google Press Release

Monday, March 17, 2008

Innovation Index Group BUY Recommendations for AAPL AMX AMZN BBY COST CSCO EBAY GE GOOG HPQ IBM INTC MCD MMM MRK MSFT NKE PG RIMM T

Innovation Index Group, Inc. systematically identifies, tracks and invests in the 20 most innovative publicly traded companies in North America – collectively called The Innovation Index. Innovation Index Group thoroughly analyzes the Top Innovators in North America, and only invests in those that show the highest potential for growth and minimize the risk to the principal.

Innovation Index Group makes the following BUY recommendations for the Top 20 Innovators of The Innovation Index with Target Price for Q4, 2008:

The Top 20 Innovators	Ticker	Recommend	Closing Price	Target Price
APPLE INC	AAPL	BUY	$126.61	$235 - $250
AMERICA MOVIL	AMX	BUY	$58.84	$80 - $85
AMAZON INC	AMZN	BUY	$68.22	$95 - $100
BEST BUY INC	BBY	BUY	$40.01	$55 - $60
COSTCO WHOLESALE CORP	COST	BUY	$60.86	$75 - $80
CISCO SYSTEMS INC	CSCO	BUY	$24.32	$30 - $35
EBAY INC	EBAY	BUY	$26.25	$35 - $40
GENERAL ELECTRIC CO	GE	BUY	$33.82	$40 - $45
GOOGLE INC	GOOG	BUY	$437.92	$675 - $745
HEWLETT PACKARD CO	HPQ	BUY	$45.92	$58 - $63
IBM	IBM	BUY	$115.23	$120 - $125
INTEL CORP	INTC	BUY	$20.66	$27 - $32
MCDONALDS CORP	MCD	BUY	$54.78	$64 - $69
3M CO	MMM	BUY	$77.53	$94 - $99
MERCK & CO INC	MRK	BUY	$41.34	$58 - $63
MICROSOFT CORP	MSFT	BUY	$27.96	$38 - $43
NIKE INC	NKE	BUY	$59.96	$77 - $82
PROCTER & GAMBLE CO	PG	BUY	$66.74	$79 - $84
RESEARCH IN MOTION LTD	RIMM	BUY	$101.69	$135 - $145
AT&T INC	T	BUY	$35.03	$43 - $48
The Innovation Index			93.62
Closing Price - 03-14-08
Target Price - Q4, 2008

Innovation Index Group BUY recommendations and price targets for RIM and IBM have been achieved before Q4, 2008.

Innovation Index Group makes the following recommendation updates for RIM and IBM for Q4, 2008:

On Mar 14, 2008, the recommendations were:

IBM

BUY

$115.23

$120 - $125

RESEARCH IN MOTION LTD

RIMM

BUY

$101.69

$135 - $145

On May 12, 2008, the updated recommendations are:

IBM

HOLD

$125.24

$132 - $137

RESEARCH IN MOTION LTD

RIMM

BUY

$141.97

$155 - $175

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 is up 10% in 2008 (May 12, 2008 market close).*

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:

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

Thursday, February 14, 2008

3M and PG - Smart Long-Term Buys in Turbulent Markets

3M (NYSE:MMM) and P&G (Proctor & Gamble) (NYSE: PG) are two of the Top 20 Innovators of The Innovation Index.

Both 3M and P&G are resilient innovators who time and again find ways to grow and excel in turbulent times, and reward their investors. 3M is an innovation machine. P&G knows how to grow through innovations.

For instance, "the Board of Directors of 3M (NYSE:MMM) declared a dividend (this month) on the company's common stock of 50 cents per share for the first quarter 2008, a 4.2 percent increase over the quarterly dividend paid in 2007." This would mark the company's 366th consecutive quarterly dividend and the 50th consecutive year of 3M dividend increases. Also, 3M has returned $16.6 billion to shareholders through dividends and share repurchases, $4.6 billion of which was in 2007.

How is 3M stock performing over the last two years? It has gained 12%, and has been at times choppy. However, if one accounts for the dividends that 3M has rewarded, it has performed reasonably well.

3M Stock Performance

We believe 3M will rebound for the rest of 2008, and 3M stock will finish in the range of at least 5% to 10% appreciation. Main reasoning has to do with the latest earnings report where it reported 2007 sales of $24.5 billion, an all-time record for the company. Sales were up 7 percent from a year ago, and up 11 percent adjusted for recently divested businesses. Net income for 2007 was $4.1 billion, or $5.60 per share, versus $3.9 billion or $5.06 per share in 2006, up 6 percent and 11 percent, respectively. And the company emphasized its 2008 guidance: "3M reiterated its 2008 earnings expectations. The company expects 2008 earnings to be a minimum 10 percent increase over its 2007 earnings-per-share of $4.98, which excludes special items."

P&G stock has performed rather well gaining 28% over the last two years. We believe P&G will have another double-digit performance in 2008 owing to its strong growth and earnings momentum, and new innovations across various industries.

P&G Stock Performance

The Procter & Gamble Company (NYSE: PG) announced "net sales growth of nine percent to $21.6 billion for the latest quarter. Sales were up behind strong volume growth from continued success on key product initiatives and double-digit organic growth in developing regions. Organic volume increased six percent and organic sales were up five percent for the quarter. Diluted earnings per share increased 17 percent to $0.98 per share, above the top end of the company's $0.95 to $0.97 per share guidance range. Earnings grew as topline growth and continued Gillette synergy benefits more than offset higher commodity costs." P&G also announced new coffee business under the Folgers coffee brand to be called The Folgers Coffee Company. P&G continues to grow under the creative leadership of A.G. Lafley, Chairman of the Board and Chief Executive Officer. Lafley is a creative leader who knows how to drive new innovations.

3M and P&G - they are both smart, long-term buys in turbulent markets!

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index and returned 66% in 2007, and 174% in the previous five years. If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
Introducing The Innovation Index Fund - Invest into The Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 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
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007

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 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.

Tuesday, February 12, 2008

Starbucks gets it right this time, partners with AT&T to provide Free Wi-Fi

AT&T Inc. (NYSE: T) and Starbucks (Nasdaq: SBUX) announced plans to deliver AT&T Wi-Fi(SM) service at more than 7,000 company-operated Starbucks locations across the United States. Starbucks and AT&T will offer a mix of free and paid Wi-Fi offerings at Starbucks stores to meet the needs of both frequent and occasional Starbucks Wi-Fi customers.

AT&T benefits because "the initiative further expands the AT&T Wi-Fi network to more than 17,000 U.S. hot spots and more than 70,000 globally" thereby entrenching AT&T as the leader in hot spots and making it the ever ubiquitous brand for Internet and mobility.

AT&T is one of the Top 20 Innovators of The Innovation Index. Starbucks was a Top 20 Innovator in 2007.

Starbucks benefits because millions of customers will now flock Starbucks for coffee and free Internet. Importantly, for the first time, a Starbucks Card holder gets an added benefit of two hours of free Wi-Fi service per day! According to the press release: "Beginning this spring, Starbucks Card holders can enjoy up to two hours of free Wi-Fi service per day at Starbucks locations offering Wi-Fi access, while more than 12 million qualifying AT&T broadband and AT&T U-verse(SM) Internet customers will have unlimited free access to the Wi-Fi service. In addition, more than 5 million of AT&T's remote access services business customers will be able to access Wi-Fi service at Starbucks locations."

Fringe revenue benefits: "In addition to the free Wi-Fi access for qualifying AT&T customers and any Starbucks Card holder, customers will be able to purchase tiered access to the AT&T Wi-Fi network at Starbucks at attractive price points. For a two-hour period, customers will pay just $3.99 per session. Monthly membership will also be available for $19.99 per month, and will include access to any of AT&T's 70,000 hot spots in 89 countries around the world."

Bottomline:

Rick Welday, AT&T chief marketing officer, Consumer emphasized: "Our work with Starbucks is collaborative innovation at its finest." Quite Possibly. What is Starbucks recipe for turnaround? Introduce $1 coffee, provide free coffee to loyal Starbucks customers who have a Starbucks card (coffee loyalty program), and offer free services such as the free Wi-fi to loyal customers. The new program will be a hit! As for AT&T, this is a huge marketing win, since it creates presence of AT&T in even more places and hot spots around the country and the world, provides AT&T customers nationwide Wi-Fi access and entrenches them further (not to mention increases customer loyalty), and has the potential upside of incremental revenue in the tens of millions.

Invest in the Innovation Index Fund

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 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.

Friday, February 8, 2008

IBM completes $5 billion Cognos acquisition, announces exciting new Information On Demand strategy

IBM (NYSE: IBM) is one of the Top 20 Innovators of The Innovation Index. IBM made several key announcements today regarding the completion of $5 billion Cognos acquisition:

An array of new and enhanced joint IBM-Cognos solutions, products and services from across the company that enable organizations of all sizes to gain better insights from their data, improve decision-making, and optimize business performance, including:

--  10 new and enhanced IBM solutions for banking, retail, healthcare,
government, life sciences and manufacturing industries.
--  Six pre-integrated IBM-Cognos product offerings that enable companies
to use business intelligence to improve overall business performance.
--  Information on Demand Infrastructure Services to help clients plan,
design and deploy a resilient enterprise data, storage and content
management environment.

IBM also announced a new capability called IBM Dashboard Accelerator software using Cognos "builder" that will help companies extract business data and present it in new, different and more meaningful contexts through their IBM WebSphere Portal applications.

Further, IBM re-iterated the importance of Cognos acquisition on Future Earnings per Share growth. The acquisition supports IBM's objective for earnings-per-share growth through 2010.

In a letter to IBM business partners, Ambuj Goyal, General Manager of Information Management Software, wrote:

"I am very pleased to announce that IBM has completed the acquisition of Cognos. Cognos will be integrated into the IBM Software Group as part of the Information Management division where the synergies and market messages are most closely aligned. The addition of Cognos complements IBM Information On Demand by unlocking the business value of information for competitive advantage, and further builds on leadership by IBM in delivering SOA solutions.

I am very excited about the opportunities that lie ahead for the combined IBM and Cognos organization. With our collective strengths, we look forward to accelerating innovation, creating value, and driving business success.

Cognos maintains a vibrant and growing Business Partner community, with deep skills, industry knowledge, and a roster of proven, scaleable solutions built on the Cognos technology. The Cognos product portfolio will continue to deliver significant value to IBM and our customers..."

Bottomline:

IBM spent five times Cognos annual revenue of about $1 billion to acquire Cognos at $5 billion. Without counting the integration, distribution and operational efficiencies that IBM provides, the Cognos acquisition will add at least $1 billion in additional revenue in 2008. Add to this $1 billion, the actual benefits that an IBM acquisition will provide Cognos customers, joint IBM and Cognos customers, and future customers of Information On Demand solutions. IBM has quite possibly found the diamond that could potentially generate $2 billion to $4 billion in additional revenue in the next three to five years if the global market for on demand information expands. Cognos could be perhaps IBM's dark horse over the next several years.

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index including IBM and returned 66% in 2007, and 174% in the previous five years. If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

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 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.

References:

IBM Press Releases and Business Partner Communication