The Top Innovators of the Innovation Index are having better to excellent second quarter results in 2008. These top innovators' 2008 second quarterly earnings increased 5% to 43% over 2007 second quarter earnings. This is fantastic growth!! In short, these innovators are growing even in these trying economic conditions. When the going gets tough, the tough gets going.
Their quarterly stock performance did not quite correlate with their quarterly earnings performance though. The stock markets are discounting these solid innovators owing to the general malaise in the U.S. economy, increase in gasoline and oil prices, increase in inflation, and the meltdown of the financials sector and the housing market.
Innovation Index Group believes that these innovators will reward the patient, long-term investors focused on fundamentals of smart investing. Innovation Index Group further believes that these innovators present an attractive buying opportunity at these discounted prices. How successful are some of their new innovations? Check our latest industry article that talks about measuring business innovation success.
| The Top 20 Innovators | Mar 31, 2008 | June 30, 2008 | Quarterly |
| APPLE INC | 143.50 | 167.44 | 17% |
| AMERICA MOVIL | 63.69 | 52.75 | -17% |
| AMAZON INC | 71.30 | 73.33 | 3% |
| BEST BUY INC | 41.56 | 39.60 | -5% |
| COSTCO WHSL CORP | 64.97 | 70.14 | 8% |
| CISCO SYS INC | 24.09 | 23.26 | -3% |
| EBAY INC | 29.84 | 27.33 | -8% |
| GENERAL ELECTRIC CO | 37.01 | 26.69 | -28% |
| GOOGLE INC | 440.47 | 526.42 | 20% |
| HEWLETT PACKARD CO | 45.66 | 44.21 | -3% |
| IBM | 115.14 | 118.53 | 3% |
| INTEL CORP | 21.18 | 21.48 | 1% |
| MCDONALDS CORP | 55.77 | 56.22 | 1% |
| 3M CO | 79.15 | 69.59 | -12% |
| MERCK & CO INC | 37.95 | 37.69 | -1% |
| MICROSOFT CORP | 28.38 | 27.51 | -3% |
| NIKE INC | 68.00 | 59.61 | -12% |
| PROCTER & GAMBLE CO | 70.07 | 60.81 | -13% |
| RESEARCH IN MOTION LTD | 112.23 | 116.90 | 4% |
| AT&T INC | 38.30 | 33.69 | -12% |
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| S & P 500 | 1,322.70 | 1,280.00 | -3.23% |
| NASDAQ | 2,279.10 | 2,292.98 | 0.61% |
| Dow Jones | 12,262.89 | 11,350.01 | -7.44% |
| © Innovation Index Group, Inc. http://www.InnovationIndexGroup.com |
Second Quarter Leaders
Google led all innovators with 20% jump in stock performance in the second quarter – Google is perhaps the best internet bell weather. Apple had an equally impressive 17% increase thanks in large part due to the growth in Mac business, solid performance of the iPod business, and new revenue growth from the iPhone 3G. There were six other innovators with single digit increases in stock performance. IBM leads all innovators in 2008 with a 10% jump in stock performance.
Second Quarter Laggards
GE led all innovators with 28% drop in quarterly stock performance – GE’s first quarter earnings miss still reverberates; although GE delivered a good second quarter earnings. America Movil dropped 17%, followed by Proctor & Gamble with 13%. Overall, twelve innovators finished in the red in the second quarter.
Top Innovators Earnings Update
Google Inc.'s (GOOG) fiscal second-quarter profit rose to $1.25 billion, or $3.92 a share, from $925.1 million, or $2.93 a share in the same period a year earlier, an increase of 35%. Google reported revenues of $5.37 billion for the second quarter 2008, representing a 39% increase over second quarter 2007 revenues of $3.87 billion. "Strong international growth as well as sustained traffic increases on Google's web properties propelled us to another strong quarter, despite a more challenging economic environment," said Eric Schmidt, CEO of Google.
IBM Corp. (IBM) reported a second-quarter profit of $2.77 billion, or $1.98 a share, up from $2.26 billion, or $1.55 a share in the same period a year ago, an increase of 23%. Revenue rose to $26.82 billion from last year's sales of $23.8 billion, an increase of 13%. IBM's Chief Executive Sam Palmisano said the company was sticking by its 2008 earnings estimate of $8.75 a share, and its long-term forecast of a profit of $10 to $11 a share for its 2010 fiscal year.
Microsoft Corp. (MSFT) reported fourth-quarter earnings of $4.3 billion, or 46 cents a share, compared to earnings of $3 billion, or 31 cents a share, for the same period last year, an increase of 43%. Quarterly Revenue grew to $15.8 billion from $13.4 billion, an increase of 18%. Chris Liddell, chief financial officer at Microsoft said: "Looking forward, despite difficult economic conditions, we will build upon the momentum exiting fiscal year 2008 and expect to deliver another year of double-digit revenue and earnings growth in fiscal year 2009."
eBay Inc. (EBAY) reported second quarter revenue of $2.20 billion, up $361 million from the same period last year, an increase of 20%. Net income was $460 million, or $0.35 per diluted share, and non-GAAP net income was $568 million, or $0.43 per diluted share, an increase of 20%. "This was a strong quarter and we are very pleased with the performance of the portfolio, particularly with the growth generated by PayPal," said eBay Inc. President and CEO John Donahoe. "We're delivering strong results in a tough economic environment."
Intel Corp.'s (INTC) second-quarter profit jumped 25 percent owing to strong sale of laptops. Global PC demand is growing despite the weakness in U.S. economy. CEO Paul Otellini said demand for Intel's chips remains strong globally. Three-quarters of Intel's business is outside the U.S. Intel earned $1.6 billion, or 28 cents per share, in the quarter, 3 cents above analyst's forecasts and well above the $1.28 billion, or 22 cents per share, figure a year ago.
The Procter & Gamble Company (PG) confirmed previously announced sales and earnings guidance for the April to June quarter of fiscal year 2007/08. The company continues to expect sales growth for the quarter of 8 percent to 10 percent, organic sales growth in line with previous guidance and diluted earnings per share of $0.76 to $0.78.
GE (GE) second quarter 2008 earnings from continuing operations were $5.4 billion with $.54 per share, which was flat year-over-year from second quarter 2007. Second quarter revenues from continuing operations were $46.9 billion, up 11%. "Led by double-digit segment profit growth in our industrial businesses and a strong relative performance in our financial services businesses, we delivered a solid quarter in a volatile environment," GE Chairman and CEO Jeff Immelt said, "Even with all this uncertainty, we still see growth opportunities ahead."
Apple (AAPL) net income surged 31% over the year-ago period. The company reported net income of $1.07 billion, or $1.19 per share, on sales of $7.5 billion, compared with net income of $818 million, or 92 cents per share, on sales of $5.4 billion for the same period a year ago. Sales surged 39%. Apple already sold over 1 million new iPhones in the first weekend of iPhone 3G launch, and Apple CFO indicated that the current quarter will be the best quarter for iPhone sales in the conference call. Further, Apple CFO also hinted of Apple introducing a major new product in the coming quarter.
America Movil (AMX), the largest cell-phone operator in Latin America, posted a 25 percent rise in second-quarter net profit on Monday, beating forecasts after adding 6.1 million new mobile clients. America Movil said April-June net profit was a better-than-expected $1.7 billion. America Movil surprised everyone by the net increase in new mobile clients.
Merck (MRK) said profit rose to $1.77 billion, or 82 cents per share, from $1.68 billion, or 77 cents per share, during the prior-year period, an increase of 5%. Sales fell 1 percent to $6.05 billion from $6.11 billion. Merck said it earned 86 cents per share, beating analysts’ predictions.
McDonald's (MCD) earned $1.19 billion in the second quarter, including a gain from the sale of its stake in sandwich chain Pret A Manger. A year earlier, McDonald's had a loss of $711.7 million stemming from charges on the sale of its Latin America and Caribbean businesses. Revenue rose 4 percent to $6.08 billion from $5.84 billion a year ago, beating analysts' predictions. In the second quarter, McDonald's reported same-store sales increases every month, the key indicator for growth. For June, the company said same-store sales rose 5.6 percent for the month overall and jumped 3.8 percent in the U.S. McDonald's attributes the sales growth to new innovations such as Breakfast Chicken, addition of chicken sandwich for lunch, and espresso-based coffee drinks.
AT&T Inc. (T) said Wednesday second-quarter profit jumped 30% as the phone giant gained a net 1.3 million wireless customers and reduced expenses. In the second quarter, AT&T delivered net income of $3.77 billion, or 63 cents a share. That was up from $2.90 billion, or 47 cents a share, in the 2007 second quarter, an increase of 30%. Total Revenue rose 4.7% to $30.87 billion from $29.48 billion, with a nearly 16% increase in wireless sales countering an 8.3% drop in AT&T's voice-calling business. Profits met Wall Street expectations. AT&T gained 170,000 customers for its new U-Verse fiber-TV service to finish with 549,000 in service -- more than halfway toward its goal of 1 million by year-end. The company hopes its new TV service will keep customers from defecting to cable and lure some old subscribers back. "Scaling U-Verse is a major initiative for us. Penetration is growing nicely," Chief Financial Officer Rick Lindner said in a conference call with analysts.
Amazon.com (AMZN) net sales increased 41% to $4.06 billion in the second quarter, compared with $2.89 billion in second quarter 2007. Operating income increased 86% to $217 million in the second quarter compared with $116 million in second quarter 2007. Worldwide Media sales grew 31% to $2.41 billion in second quarter 2008, compared with $1.83 billion in second quarter 2007. Worldwide Electronics & Other General Merchandise sales grew 58% to $1.53 billion in second quarter 2008, compared with $0.97 billion in second quarter 2007. "Customers continue to take advantage of our low prices, free shipping and Amazon Prime," said Jeff Bezos, founder and CEO of Amazon.com. "Amazon Prime membership costs less than a tank of gas - more and more customers are joining the program and enjoying its benefits."
3M (MMM) second-quarter sales grew to $6.7 billion, an increase of 9.7 percent over second quarter of 2007. Net income was $945 million, or $1.33 per share, versus $917 million, or $1.25 per share in the corresponding period last year. "The strength of 3M's global portfolio was evident in the second quarter," said George W. Buckley, 3M chairman, president and CEO. "3M's three largest businesses, Industrial and Transportation, Health Care and Safety, Security and Protection Services, grew at double-digit rates."
Bottomline:
The Top Innovators are growing in 2008! You read it right! They are definitely doing better than 2007. These innovators are not impacted by the tough U.S. economy. The main reason: New innovations driving growth and creating new business, growth in global revenue owing to better global strategy and market penetration, and operational excellence throughout the enterprise in a tight market. Innovation Index Group maintains a BUY rating on these top innovators of the Innovation Index.
2008 Outlook
Innovation Index Group remains conservatively bullish for Q4, 2008. There are many positives for the second half of 2008 – the top innovators have already delivered good to strong results so far and traditionally have their best quarters in the second half of the year; the stock markets typically rally in the election year in the fourth quarter, and we believe that the stock markets have bottomed out; finally, all the initiatives led by the Federal Reserve, IRS, and the U.S. Treasury will begin to show net positive effects on the economy and the markets.
About Innovation Index Group:
Innovation Index Group, Inc. is a new research & management company focused on systematically identifying, tracking, researching and reporting on the most innovative publicly traded companies in North America – collectively called 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 Reports:
Introducing The Innovation Index - Learn about the Innovation Index
Innovation Index Group BUY Recommendations - 2008 BUY Recommendations and Estimates
Q1 2008 Report - Innovation Index ahead of S&P 500 - Q1, 2008 Report
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
Measuring Business Innovation Success – How successful is your new innovation?
Future earnings guidance, A leading indicator - Earnings Guidance and Stock Price
Smart Investing In Tough Economic Times - Guide to Prudent, Value Investing
To Sell Or Not To Sell - Long-Term Investing in Turbulent Markets
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. invested in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results
Source:
Innovators Press Releases
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