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Friday, February 15, 2008

Google One Year Performance Beats Microsoft and Yahoo - The Innovation Index

Google 1 year Stock Performance compared to NASDAQ, Yahoo, Microsoft and News Corp

Google Inc. (NASDAQ: GOOG) is one of the Top 20 Innovators of The Innovation Index. Microsoft (NASDAQ: MSFT) is also part of The Innovation Index. Yahoo (NASDAQ: YHOO) belonged in The Innovation Index in 2007. Google one year stock performance beats NASDAQ, Microsoft, Yahoo and News Corp combined. Although all these innovators are in the negative in 2008 - except for Yahoo owing to the pending acquisition offer from Microsoft. How will 2008 shape out for these innovators? The Innovation Index predicts double-digit gains for each of these innovators' stock performance in 2008. This will be due to strong summer and Fall earnings seasons, and investors returning after the hiatus. This means Google could well exceed the high point of $747 set in 2007. The Innovation Index is long on Google and Microsoft.

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, 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

A Bird (Microsoft Offer) in Hand Worth More than Two in Bush (Google+Yahoo)

What will Yahoo board decide this weekend? Or by early next week? Yahoo Inc. (NASDAQ: YHOO) was one of the Top 20 Innovators of The Innovation Index.

Will Yahoo ride into the sunset? A $44.6 billion offer is a bird in hand after all.

Is Google Inc. (NASDAQ: GOOG) playing spoiler to stall the pending Yahoo acquisition by Microsoft Corporation (NASDAQ: MSFT)? Why not! Google has nothing to lose, everything to gain from the deal falling apart, or taking years to consummate.

What options does Yahoo really have at this point?

1. Tough it out all alone - Obviously this is not working with the ever widening gap between Google and Yahoo. But as long as Yahoo is profitable, it can call its shots. It can do what it pleases. It can take the time it takes to turnaround. And if all that does not work, well, Yahoo can look back and say, we tried! Dell is trying hard to turnaround. Yahoo can too.

2. Get acquired by Microsoft Corporation (NASDAQ: MSFT), the 800 lb gorilla - Can it work? Lose the independence. Lose the freedom. Redmond and Silicon Valley. Unless Microsoft makes Yahoo an independent business. But after Microsoft shells out close to $23 billion or so in cash, would it have the luxury to let Yahoo run by itself. May be not! And who would run the show post acquisition? Jerry Yang or a Microsoft elected official?

3. Partner with the nemesis Google, the company that put Yahoo in this precarious position in the first place, and made it difficult for Yahoo to catch Google. - How will the partnership work? Google is already taking market share from Yahoo, and eventually seize 80% of the Search market - a position that will make Google a virtual lock for years to come. Why delay the inevitable? Can Google really be the friend Yahoo is seeking?

4. Merge with Amazon.com Inc. (NASDAQ: AMZN) or eBay Inc. (NASDAQ: EBAY) - this looked like a viable option. Merger of equals. Merger of friends. This may have been the best option, although time seems to be running out for this one. Neither Amazon.com nor eBay have come forth. And Yahoo may not have asked either. The world would have welcomed an eBay - Yahoo merger. That may have been the lasting legacy of Meg Whitman. But alas. Not to be.

So what will Yahoo really do at this point? Take the bird in hand, or place bets with Google or go solo? Microsoft has not really put a time pressure on Yahoo. But investors, customers, partners and employees are queasy on what decision Yahoo will take. And it's time! If Yahoo takes too long to decide, everyone will simply question the leadership at Yahoo. Yahoo must decide next week. Yahoo will.

Amazon.com, eBay, Google and Microsoft are Top 20 Innovators of The Innovation Index.

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 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.

Monday, February 4, 2008

Is Google playing spoiler in proposed Microsoft acquisition of Yahoo?

On Friday, Feb 1, I wrote about how:
Yahoo will ride into the sunset after getting acquired by Microsoft

Microsoft Corporation (NASDAQ: MSFT) and Google Inc. (NASDAQ: GOOG) are two of the Top 20 Innovators of The Innovation Index. The Innovation Index closed 2007 with 66% gain, crushing the major U.S. indices. Yahoo Inc. (NASDAQ: YHOO) was a Top 20 Innovator in 2007.

Today, Google Senior VP David Drummond posted this response to the pending acquisition of Yahoo by Microsoft:

Yahoo! and the future of the Internet
Posted by David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer

The openness of the Internet is what made Google -- and Yahoo! -- possible. A good idea that users find useful spreads quickly. Businesses can be created around the idea. Users benefit from constant innovation. It's what makes the Internet such an exciting place.

So Microsoft's hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation.

Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.

Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.

This hostile bid was announced on Friday so there is plenty of time for these questions to be thoroughly addressed. We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first -- and should come first -- as the merits of this proposed acquisition are examined and alternatives explored.

What do you, the Internet Users, think of this proposed acquisition of Yahoo by Microsoft? Is it unfair? Is it hostile? Does it kill Internet Innovation as Google is claiming? Does it take away the choice? Please respond to the open poll on this blog and provide your viewpoint on whether Microsoft should acquire Yahoo!

Bottomline:

Yahoo board will accept Microsoft's proposal this time around. This is one acquisition where Google is not going to try to outbid Microsoft. There will be intense negotiations between Yahoo and Microsoft on the future of Yahoo Search, key Yahoo properties such as email and Finance, and Yahoo employees. However, in the end, this would be too sweet a deal for the Yahoo board to reject. Yahoo will ride into the sunset!

Invest in The Innovation Index

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 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 1, 2008

Yahoo will ride into the sunset after getting acquired by Microsoft

Microsoft Corporation (NASDAQ: MSFT), the giant, the goliath, the conqueror, roared loud today. The roar was so LOUD that the effects of it were felt worldwide across all time zones, across all geographies. Out here, the roar provided a huge jolt to the Wall Street in the morning at 6:30 am, and then reverberated through out the entire day. No trip to Starbucks today! Strangely enough, the roar did not come in the form of a speech by Steve Ballmer or Bill Gates mightily touting the success of Windows Vista, it came instead in the form of a written plea, a note in the form of a press release that went out to the board, employees, and shareholders of a rival, a sort of a friendly takeover, almost a pat on the back, urging them to consider Microsoft's request to acquire them at 62% premium to the closing stock price. Kudos Microsoft! You have not only mastered the art of creating and preserving market leadership, now you have shown us how to acquire a large company and get the world behind you. Now, it's up to the board to decide.

Microsoft is one of the Top 20 Innovators of The Innovation Index. The Innovation Index closed 2007 with 66% gain, crushing the major U.S. indices.

Microsoft was in a friendly mood today, touting how great their rival is, perhaps even patronizing it. For the rival is no other than Yahoo, the company that got the Internet going, and is symbolic of the freedom and free spirit that embodies the Internet. Yahoo Inc. (NASDAQ: YHOO) was one of the Top 20 Innovators of The Innovation Index for 2007.

"We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," said Steve Ballmer, chief executive officer of Microsoft. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."
"Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure," said Ray Ozzie, chief software architect at Microsoft. "The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own."
The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.
"The combined assets and strong services focus of these two companies will enable us to achieve scale economics while reaching R&D critical mass to deliver innovation breakthroughs," said Kevin Johnson, president of the Platforms & Services Division of Microsoft. "The industry will be well served by having more than one strong player, offering more value and real choice to advertisers, publishers and consumers."

Is Microsoft playing the role of a savior, or the role of a pirate waiting for the best opportunity? Yahoo just announced the annual and fourth quarter earnings two days ago, and missed the earnings estimates, and saw its stock plummet more than 10%. Further, Yahoo co-founder and chief executive officer, Jerry Yang, said, "While we will continue to face headwinds this year, we believe that the moves we are making will help us exit 2008 stronger and more competitive and return to higher levels of operating cash flow growth in 2009." Yang was essentially telling the world and the investors to give Yahoo until 2009 to rebound, to turnaround. The investors simply balked and retreated. Hence, this provided Microsoft the best opportunity, at a time when the investors were fleeing thereby sending Yahoo stock at a multi-year low, and a shaken leadership who may look for the escape hatch.

In a letter sent to the Yahoo board, Microsoft explains the rationale behind the acquisition: "Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing."

Microsoft articulates this further, "In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that "now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction." According to that letter, the principal reason for this view was the Yahoo! Board's confidence in the "potential upside" if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved."

Make no mistake. Whereas Microsoft is willing to provide a steep premium of 62% and value Yahoo at a huge $44.6 billion, the real prize that Microsoft is going after is Google Inc. (NASDAQ: GOOG), another Top 20 Innovator of The Innovation Index. Microsoft accepts Google's dominance in the market of online search and advertising (it states this in its own press release), and Microsoft does not like it and is not willing to accept it. It has waited way too long, tried many different things with its own MSN and Live services, and yet has not made a dent in the Search market. And the lead has only grown. Google narrowly missed earnings in the latest quarter. Microsoft smells blood. If Microsoft acquires Yahoo, together they would own about 32% of the U.S. search market, still a distant second to Google's 50% plus market share. But, if Microsoft does not acquire Yahoo, and with Yahoo floundering, it may have to give up on the search market altogether. Which Microsoft is not willing to do!

So now the question of the day is "What if Jerry Yang and the Yahoo board reject Microsoft's latest overture?" Are they in a position to defend the rejection this time around? Yahoo shareholders are definitely salivating at the sweet offer, and would be unwilling to relent now. By going public, Microsoft has really put the acquisition in the hands of the investors and shareholders. How did Yahoo reply to Microsoft bid? Yahoo issued a press release indicating: "The Company said that its Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders." Yahoo was quick to point out that shareholders matter.

How would the deal impact Google? Last year, I talked about Google versus Yahoo - A tale of two cities and Google's growing market share; there were even talks on whether Yahoo can catch Google. Google will have a worthy nemesis in the short term, however, may prove to be a bigger winner in this particular battle in the longer term. It is quite possible that after Microsoft acquires Yahoo, even more users will switch from Yahoo and begin using Google services. Yahoo brand still represents a sort of enigma, the last man standing in the heated battle of Internet. Yahoo is the underdog that many users still like to use and embrace. However, with the takeover by Microsoft, this perception will change overnight. And Yahoo users may not stay with Yahoo, and go to Google. This could benefit Google even more. If Microsoft is to create a real market out of the Yahoo brand, it must embrace the Yahoo brand, and relinquish its own search to Yahoo eventually. Perhaps this should be Yahoo board's decision - only merge if Yahoo brand and Yahoo search stays.

Assuming Microsoft finds a way to pay for this large acquisition (Microsoft has proposed 50% cash or about $22 billion, and 50% stock), how would the $44.6 billion deal compare to the Top Ten Mergers and Acquisitions since 2000? It would not make it to the top ten list, however, will definitely make it in the top twenty. And it would be the largest acquisition by Microsoft ever, easily eclipsing last year's $6 billion acquisition of AQuantive.

The largest M&A deals worldwide since 2000:

Rank	Year	Acquirer	Target	Transaction Value (in Mil. USD)
1	2000	Merger: America Online Inc. (AOL)	Time Warner	164,747
2	2000	Glaxo Wellcome Plc.	SmithKline Beecham Plc.	75,961
3	2004	Royal Dutch Petroleum Co.	Shell Transport & Trading Co	74,559
4	2006	AT&T Inc.	BellSouth Corporation	72,671
5	2001	Comcast Corporation	AT&T Broadband & Internet Svcs	72,041
6	2004	Sanofi-Synthelabo SA	Aventis SA	60,243
7	2000	Spin-off: Nortel Networks Corporation		59,974
8	2002	Pfizer Inc.	Pharmacia Corporation	59,515
9	2004	Merger: JP Morgan Chase & Co.	Bank One Corporation	58,761
10	2006	Pending: E.on AG	Endesa SA	56,266

Source: Institute of Mergers, Acquisitions and Alliances Research, Thomson Financial

Bottomline:

Yahoo board will accept Microsoft's proposal this time around. This is one acquisition where Google is not going to try to outbid Microsoft. There will be intense negotiations between Yahoo and Microsoft on the future of Yahoo Search, key Yahoo properties such as email and Finance, and Yahoo employees. However, in the end, this would be too sweet a deal for the Yahoo board to reject. Yahoo will ride into the sunset!

Invest in the Innovation Index Fund

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, December 18, 2007

The Innovation Index levels at 56%, crushes major U.S. indices

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund

(click to maximize)

The Innovation Index gained 3 points after a short drop last month, and has now gained 56% for the year, effectively tying the performance at the end of the 3^rd quarter. Could this be another banner year for The Innovation Index? The Innovation Index easily crushes the major U.S indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 dropped 5% after the third quarter, and is now up only 2% for the year; NASDAQ shed 5% after the third quarter, and is now up only 7% for the year; the Dow Jones Index also dropped 5%, and is now up 6% for the year.

(click to maximize)

The Innovation Index closed at 101.28 on December 17, 2007, effectively even from the closing price of 101.39 on Sep 28, 2007, and up 56% from the closing price of 65.05 on December 29, 2006.

The Innovators were busy in November, 2007 and went on an acquisition spree. Here were some of the top acquisitions by the top innovators.

Mid-Quarter Leaders

Apple Inc. (NASDAQ: AAPL) is the leader mid-quarter, after adding another 20%, and gaining a massive 117% for the year - early results indicate good results for Apple’s 4 horsemen: iPod/iTunes, iPhone, Leopard and the Mac. Google Inc. (NASDAQ: GOOG) is next at 18% increase mid-quarter, and up by a solid 45% for the year – Google’s Search is increasing market share and forays into video and integrated advertising appear to gaining strength. Microsoft Corporation (NASDAQ: MSFT), the earlier leader mid-quarter with 17% gains is third, up 16% for the year – Vista is gaining full steam, and also the Office productivity software. Wal-Mart Stores, Inc. (NYSE: WMT) with gains of 10% on the heels of a good November is next up, and up 4% for the year. Only 3 more Innovators have gains mid quarter - Research In Motion Limited (NASDAQ: RIMM) continued the bull run with another 2% gain, leading all innovators with 135%. The Proctor & Gamble Company (NYSE: PG) added 4%, with an envious 15% gain for the year, and Hewlett-Packard Co. (NYSE: HPQ) stayed true to form with 2% gain, and a healthy 24% increase for the year. These innovators are enjoying an impressive 2007 to date.

Mid-Quarter Laggards

It has been a tough quarter so far for many innovators and the U.S. stock market at large. Nine innovators have double-digit losses mid-quarter, and four innovators are in the red with single-digit losses. Starbucks Corporation (NASDAQ: SBUX) has lost 23% this quarter, and is now down a huge 43% for the year. Where are those consumers buying White Chocolate Mochas and Lattes? Starbucks could use more during the cold season. Target Corp. (NYSE: TGT) and eBay Inc. (NASDAQ: EBAY) are next losing 18% this quarter; Target is down 9% for the year, however eBay is up 6% for the year. Target had disappointing November sales and the outlook for December did not improve either. eBay on the other hand is hoping that consumers spend a ton of money trading the Nintendo WIIs, iPods and other high value products during the quarter.

Cisco Systems, Inc. (NASDAQ: CSCO) has given up 16% for the quarter, and is only up 2% for the year. Can Cisco rebound? Dell Inc. (NASDAQ: DELL) disappointed the investors with the results, and is facing growth challenges. Dell is down 14% this quarter, and 6% for the year. Yahoo! Inc. (NASDAQ: YHOO) has lost 14% for the quarter, and is down 10% for the year. If Yahoo finishes the year in red, this will be back to back years of investment losses. Is Yahoo a potential acquisition target in 2008? Southwest Airlines Co. (NYSE: LUV) can’t escape the rising oil prices either, and is down 13% for the quarter, and down 16% for the year. Southwest could also end up having back-to-back year of negative gains. Can travelers return to Southwest, and would they enjoy the new “business” service.

Bell-weather GE (NYSE: GE) has given up 12% this quarter, and is now down 2% for the year. Even the GE CEO is buying back shares. Can GE finish the year in positive? International Business Machines Corp. (NYSE: IBM) has also lost 11% this quarter, although has gained 8% for the year. IBM is poised to finish the year on a positive note with an announced stock buyback program. Other notable innovators with losses in the 4^th quarter include: 3M Company (NYSE: MMM) with 8% loss for the quarter and up a solid 11% for the year, Amazon.com, Inc. (NASDAQ: AMZN) down 9% for the quarter although up a huge 116% for the year, and America Movil (NYSE: AMX) down 8% for the quarter, although up a respectable 30% for the year. Tough quarter indeed for these innovators. Intel Corporation (NASDAQ: INTC) is only down 1% this quarter, and is up a rosy 28% for the year. The good news is that fourteen of the twenty innovators are still in positive ground and with a good year-end holiday rally, they could be all going home happy along with their investors.

Yearly Leaders and Laggards

Who sits on the top of The Innovation Index? There is a change in the top position. Research In Motion Limited - (NASDAQ: RIMM) is the leader of the pack at 135% gains for the year. Apple Inc. (NASDAQ: AAPL) is next up with 117% appreciation for the year. Amazon.com, Inc. (NASDAQ: AMZN) is holding steady with 116% gains for the year. There are seven other innovators with double-digit gains for the year.

Five innovators are in the negative territory. Starbucks Corporation (NASDAQ: SBUX) is the significant decliner, down 43% for the year. Southwest Airlines Co. (NYSE: LUV) has lost 16% for the year. Finally, Yahoo! Inc. (NASDAQ: YHOO) is down 10% for the year.

Year End Predictions

Where will The Innovation Index end up when all is said and done? Is there a rally in store for the broader market that will only boost The Innovation Index? We project The Innovation Index to inch up to around 60% for the year, gaining over 4% during the remainder of the year. The consumers will finish their Christmas shopping with a bang this week, and give some of the retailers a much-needed push.

Invest in the Innovation Index Fund

I just announced the launch of a new Innovation Index Fund last week that invests in the Innovation Index. We have opened the new private placement fund for serious investors seeking to maximize their investment returns and wanting to invest at least $25K. If you want to learn more about the Innovation Index Fund, check this announcement first, then browse to Innovation Index Group website at: http://www.innovationindexgroup.com Finally, 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
The Innovation Index gains 3% during the first quarter - Quarterly Report - Q1, 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 has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.

Disclaimer: I invest in the stocks comprising The Innovation Index.

Friday, December 7, 2007

Top Acquisitions by the Top Innovators

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund

November 2007 was a busy month for the top 20 Innovators of The Innovation Index. Besides announcing key innovations, and staying on course with 53% performance gains for the year, the Innovators added more punch - in the form of key acquisitions, mostly large. Here is a roundup of top acquisitions by the top innovators in November, and the potential impact of these acquisitions in 2008:

3M (NYSE: MMM) and Aearo Technologies Inc. (NYSE: AER) announced that "they have entered into a definitive agreement for 3M's acquisition of Aearo for a total purchase price of $1.2 billion, to be financed through a combination of cash and other borrowings. Aearo is a global leader in the personal protection industry and manufactures and markets personal protection and energy absorbing products. Aearo is owned by funds advised by Permira, a leading global private equity firm, and company management." For the past year, Aearo had revenue of $508 million, growing at a CAGR of 12%. Key Aearo brands include: E-A-R, Peltor, AOSafety and SafeWaze.

According to 3M press, "Aearo will significantly expand 3M's occupational health and environmental safety platform by adding hearing protection as well as eyewear and fall protection product lines to 3M's existing full-line of respiratory products. It provides a broad platform for accelerated growth. This acquisition enables 3M to provide industrial, military and construction customers as well as consumers with a more complete personal protection solution."

Further, Aearo has a reputation for developing high-quality, innovative products and strong market competitiveness. "The complete Aearo product line includes passive hearing, communication headsets, eye protection, head and face protection and fall protection. The company also markets systems solutions and proprietary energy absorbing materials, which are incorporated into other manufacturers' products to control noise, vibration, shock and temperature."

Bottomline: Expect 3M to increase the revenue by $550 to $650 million with Aearo acquisition; also, 3M legitimately and significantly expands it's occupational health and environmental safety platform to more than 70 countries where Aearo is already marketed and sold.

Earlier in the month, 3M also announced that "it has entered into a definitive agreement to acquire the business of Bondo Corp., a manufacturer of auto body repair products for the automotive aftermarket and various other professional and consumer applications.

Bondo's established brand complements 3M's well-known line of auto body repair products for the automotive aftermarket. Bondo brand products are designed for and widely recognized by both auto body repair professionals and enthusiasts. Products include body filler, fiberglass repair materials, under coatings, and adhesives. Bondo products are sold to the auto body professional market through auto body paint specialty stores in addition to mass merchandisers and auto parts retailers."

Bondo manufactures and markets automotive body repair, household repair and marine products under the Bondo, Mar-Hyde, Bondo Home Solutions, Dynatron, Marson, Laminex and Bondo Marine brand names.

Bottomline: Bondo, which was predominant in the South and Southeast, will open a huge distribution channel through 3M's network of dealers. Although, the deal will not have a significant EPS impact in 2008, it gives 3M key products with which to expand the Automotive line of business.

Dell (NASDAQ:DELL), another top 20 innovator, "signed an agreement to acquire privately held Everdream Corp., a leading provider of Software-as-a-Service (SaaS) solutions for remote-service management." Since terms were not declared, this appears to be a small investment for Dell.

Bottomline: Everdream could be a key component in Dell's strategy of enabling customers to Simplify IT. "Everdream's capabilities complement those provided by the recently acquired SilverBack Technologies, further enabling end-to-end remote management of customers' IT environments. With this acquisition, Dell can now extend remote management of critical IT assets from servers, storage, printers, etc. to desktops, notebooks and other end-user devices globally." Is Dell done with acquisitions in this market? This will have a minimal impact on EPS for 2008.

Earlier in the month, Dell (NASDAQ:DELL) announced plans to acquire EqualLogic, a leading provider of high-performance iSCSI storage area network (SAN) solutions uniquely optimized for virtualization. The acquisition will strengthen Dell's product and channel leadership in simplifying and virtualizing IT for customers globally. iSCSI SAN technology represents the fastest growing part of the storage business.

"Under the terms of the agreement, Dell will purchase EqualLogic for approximately $1.4 billion in cash. The acquisition of EqualLogic is expected to close late in the fourth quarter of Dell's fiscal year 2008 or early in the first quarter of fiscal 2009. The company expects the acquisition to be dilutive to earnings per share, excluding the amortization of intangibles, by $0.02 to $0.05 in aggregate for Fiscal 2009 and Fiscal 2010."

Bottomline: Dell spent a lot of money for this company and placing big bets on storage; however without an announced upside in revenue, rather a dilution of EPS, one can't help but think about the future revenue growth from this acquisition. Dell has "plans to grow EqualLogic's successful channel-partner programs with current and future EqualLogic-branded products, and also to incorporate EqualLogic technology into future generations of its Dell PowerVault storage line available through the channel and direct from Dell." The investors will be in a "wait-and-watch" mode here until Dell sees real revenue growth from these acquisitions.

IBM (NYSE: IBM), a top 20 innovator, and Cognos(R) (NASDAQ: COGN) (TSX: CSN) announced that "the two companies have entered into a definitive agreement for IBM to acquire Cognos, a publicly-held company based in Ottawa, Ontario, Canada, in an all-cash transaction at a price of approximately $5 billion USD or $58 USD per share, with a net transaction value of $4.9 billion USD. It is expected to close in the first quarter of 2008."

In one word, this acquisition is HUGE!! Huge for Cognos shareholders. Especially, since this was an all cash deal.

"The acquisition of Cognos supports IBM's Information on Demand strategy, a cross-company initiative announced on February 16, 2006 that combines IBM's strength in information integration, content and data management and business consulting services to unlock the business value of information. Integrating Cognos, the 23rd IBM acquisition in support of its Information on Demand strategy, will enable new business insights to be delivered to a broader set of people across an organization, beyond the traditional users of business intelligence.

IBM said the acquisition fits squarely within both its acquisition strategy and capital allocation model, and that it will contribute to the achievement of the company's objective for earnings-per-share growth through 2010."

Bottomline: Together, IBM and Cognos are poised to become the leading provider of technology and services for Business Intelligence (BI) and Performance Management, and Business process management and possibly financial management. Cognos provides a technology platform and leadership that IBM was lacking; on the other hand IBM provides a worldwide distribution platform for Cognos across multiple industries and geographies. Together, both companies provide a complete integrated solution. This acquisition will have a nominal upside on 2008 earnings for IBM. If IBM Global Services make Cognos an integral part of their portfolio, the potential upside is huge.

Microsoft Corp. (NASDAQ: MSFT), another top 20 innovator, announced acquisition of Musiwave SA, an Openwave company (NASDAQ: OPWV) and a leading provider of mobile music entertainment services to operators and media companies, in particular in Europe. The terms of the pending acquisition were not announced.

"Mobile operators are continually looking for ways to deliver digital entertainment to their customers, and have looked to companies such as Musiwave to deliver music services that help provide the necessary infrastructure. As a provider of white-label music solutions to mobile operators in Europe, Musiwave has helped to bring a rich selection of millions of ringtones, full-track downloads and music videos to consumers." According to technology research firm Ovum, 1,106 million mobile music phones will be shipped worldwide in 2010.

Bottomline: The acquisition would bring Musiwave's relationships with music labels, device makers and mobile operators that deliver digital entertainment to consumers, together with Microsoft's Connected Entertainment technologies and services, including Windows Mobile, Zune, MSN and Windows Live. This is a strategic entry point for Microsoft in Europe, and provides Microsoft a network and a platform on which to serve up mobile entertainment. Whereas Windows Mobile provides the client entry point on mobile, Musiwave extends this further into the world of music services delivered through a solid network. Musiwave is Microsoft's answer to iTunes.

November was a busy month for some of the top innovators. Would these acquisitions lead to more innovations and positively impact the 2008 revenue for these innovators? Would Innovation Index sizzle in 2008 as it has in 2007 due to these acquisitions and its direct impact on revenue growth? We will have to fast forward to July 2008 to find answers to these questions. For now, the innovators have paved the way with key acquisitions.

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
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
The Innovation Index gains 3% during the first quarter - Quarterly Report - Q1, 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 has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.

Disclaimer: I invest in the stocks comprising The Innovation Index.

Thursday, November 15, 2007

The Innovation Index stays course at 53%, crushes major U.S. indices, Mid-Quarterly Report 11-15-2007

(click to maximize The Innovation Index Performance)

The Innovation Index steadied after the monster third quarter in 2007. The Innovation Index dropped 3% after the third quarter, and has now gained 53% for the year. The Innovation Index has already quadrupled the 2006 performance, and we still have a half quarter to go. Is there a Holiday rally this year? Could this be another banner year for The Innovation Index? The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 dropped 5% after the third quarter, and is now up only 2% for the year; NASDAQ shed 3% after the third quarter, and is up to single-digit gains at 8% for the year; the Dow Jones Index dropped the most - 6%, and is up 5% for the year.

(click to maximize The Innovation Index)

The Innovation Index closed at 99.80 on November 15, 2007, down 3% from the closing price of 101.39 on Sep 28, 2007, and up 53% from the closing price of 65.05 on December 29, 2006.

Mid-Quarter Leaders

Microsoft Corporation (NASDAQ: MSFT) is the leader mid-quarter at 15% gains, up 13% for the year. Google Inc. (NASDAQ: GOOG) is next at 11% increase mid-quarter, and up by a good 37% for the year. Apple Inc. (NASDAQ: AAPL) added another 7% mid-quarter, and is up a huge 94% for the year. Only 3 more Innovators have gains mid quarter - Wal-Mart Stores, Inc. (NYSE: WMT) with gains of 6%, although flat for the year; Research In Motion Limited (NASDAQ: RIMM) continued the bull run with another 5% gain, leading all innovators with 142%, and The Proctor & Gamble Company (NYSE: PG) added 2%, with a respectable 12% for the year.

Mid-Quarter Laggards

It has been a tough quarter so far for many innovators and the market at large. Six innovators have double-digit losses mid-quarter. 3M Company (NYSE: MMM) with 15% loss for the quarter and up only 3% for the year, Amazon.com, Inc. (NASDAQ: AMZN) down 16% for the quarter although up a huge 97% for the year, Cisco Systems, Inc. (NASDAQ: CSCO) giving up 12% for the quarter and up 7% for the year, eBay Inc. (NASDAQ: EBAY) dropping a huge 18% however staying positive at 7% for the year, International Business Machines Corp. (NYSE: IBM) shedding 12% during the quarter and staying at 7% also, and Target Corp. (NYSE: TGT) tumbling 13% during the quarter and down 3% for the year. Tough indeed. The good news is that most of the innovators are still in positive ground and with a good year-end holiday rally, they could be all going happy along with their investors.

Yearly Leaders and Laggards

Who sits on the top of The Innovation Index? There is a change in the top position. Research In Motion Limited - (NASDAQ: RIMM) is the leader of the pack at 142% gains for the year. Amazon.com, Inc. (NASDAQ: AMZN) is next with 97% gains for the year. Apple Inc. (NASDAQ: AAPL) is next up with 94% appreciation for the year. There are six other innovators with double-digit gains for the year.

Only three innovators are in the negative territory. Starbucks Corporation (NASDAQ: SBUX) is the significant decliner, down 32% for the year. Southwest Airlines Co. (NYSE: LUV) has lost 8% for the year. Finally, Target Corp. (NYSE: TGT) is down 3% for the year.

Year End Predictions

Where will The Innovation Index end up when all is said and done? Is there a rally in store for the broader market that will only boost The Innovation Index? We project The Innovation Index to close over 65% for the year, gaining over 12% for the remainder of the year. The consumers will resume their buying beginning next week, speed up during the Thanksgiving weekend, and shop till they drop in December. This year the consumers are waiting for a bit of good news and a warm, fuzzy feeling before the holidays. This will happen, although will happen later than the usual shopping period. Sure the retailers will need to lure the shoppers with more specials and higher discounts; however, once the shoppers begin to return, they will in turn bring in more shoppers. If the weather stays unusually warm though, ironically, it could negatively impact the stock market and The Innovation Index.

The Innovation Index Reports:

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
The Innovation Index gains 3% during the first quarter - Quarterly Report - Q1, 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 has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.

Disclaimer: I invest in the stocks comprising The Innovation Index.

Tuesday, October 23, 2007

The Innovation Index Quarterly Earnings On a Roll

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

3M (NYSE: MMM)

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

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

Amazon.com Inc. (NASDAQ: AMZN)

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

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

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

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

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

Apple Inc. (NASDAQ: AAPL)

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

"Apple Inc.'s (AAPL) fourth-quarter net income improved to $904 million, or $1.01 a share, from a year-earlier profit of $542 million, or 62 cents a share. Sales rose to $6.22 billion from $4.84 billion. Analysts, according to Thomson Financial, expected a quarterly profit of 86 cents a share and revenue of $6.07 billion...Among the quarter's highlights were sales of 2.16 million Macintosh PCs and 1.11 million iPhones."

eBay Inc. (NASDAQ: EBAY)

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

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

General Electric (NYSE: GE)

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

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

Google Inc. (NASDAQ: GOOG)

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

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

Intel Corporation (NASDAQ: INTC)

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

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

International Business Machines Corp. (NYSE: IBM)

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

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

Research In Motion Limited (NASDAQ: RIMM)

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

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

Southwest Airlines Co. (NYSE: LUV)

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

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

Yahoo Inc. (NASDAQ: YHOO)

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

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

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.

Disclaimer: I invest in the stocks comprising The Innovation Index.

Sunday, October 7, 2007

The Innovation Index gallops to 56%, crushes major U.S. indices - Quarterly Report 09-28-07

The Innovation Index had a monster third quarter in 2007. The Innovation Index added 20% during the third quarter, and has now gained 56% for the year. The Innovation Index has already more than quadrupled the 2006 performance, and we still have one more quarter to go. Could this be another banner year for The Innovation Index? The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 added only 2% during the quarter, and is now up 8% for the year; NASDAQ was up 4% during the quarter, and is up to double-digit gains at 12% for the year; the Dow Jones Index also gained 4% during the quarter, and is now up 11% for the year.

The Innovation Index closed at 101.39 on September 28, 2007, up 20% from the closing price of 84.68 on June 29, 2007, and up 56% from the closing price of 65.05 on December 29, 2006.

(click to maximize The Innovation Index Performance)

What caused The Innovation Index to add a spectacular 20% during the last quarter? Four innovators caused the jump, the largest increase coming from Research In Motion Limited - (NASDAQ: RIMM) that went up 38% in one quarter, and is now up 131% for the year. Amazon.com, Inc. - (NASDAQ: AMZN) also rose to dizzying heights by gaining 36% for the quarter, and is now up 136% for the year. Not to be ignored is Apple Inc. - (NASDAQ: AAPL) that gained 26% during the quarter, and is now up 81% for the year. eBay Inc. - (NASDAQ: EBAY) had an impressive run up as well, by notching gains of 21% during the quarter, and growing to 30% gains for the year.

13 of the Top 20 Innovators showed positive gains during the quarter (8 out of the 13 had double-digit gains), only 4 of the Top 20 Innovators showed negative gains, and 3 Innovators were unchanged during the quarter.

The Innovation Index is on a roll!!

Yearly Leaders and Laggards

Who sits on the top of The Innovation Index? Amazon.com, Inc. (NASDAQ: AMZN) gained 36% during the quarter, and leads all innovators with a whopping 136% gains for the year. Research In Motion Limited - (NASDAQ: RIMM) is next up with massive 131% gains for the year. Apple Inc. (NASDAQ: AAPL) is next up with 81% appreciation for the year. There are twelve other innovators with double-digit gains for the year.

Starbucks Corporation (NASDAQ: SBUX) is the significant decliner, down 26% for the year; can Starbucks rally in the last quarter of the year?

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.

Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)

The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.

Disclaimer: I invest in the stocks comprising The Innovation Index.