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.
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 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.
