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Thursday, October 27, 2011

Largest USA Tech Companies Profits Dip (Charts) *Down QoQ, Up YoY*

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Largest USA Technology Companies
*Updated 10-21-11 for latest quarterly financial results reported*
*Qualcomm reports 11-2-11*


Largest USA Technology Companies Profits Dip

Largest USA Tech Companies Net Income QoQ The 9 Largest USA Tech Companies reported an average -7.53% decrease in quarterly net income, compared to the prior quarter. 5 of the 9 companies reported a decrease. Some of these companies are on a fiscal year, therefore the latest quarter reported for each company is included.
How Tech Performed:
Intel +17.40%
Google +8.94%
IBM +4.83%
Qualcomm +3.60%
Microsoft -2.32%
Apple -9.37%
HP -16.41%
Cisco -31.82%
Oracle -42.66%


Largest USA Tech Companies Net Income YoY The 9 Largest USA Tech Companies reported an average +17.06% increase in quarterly net income, compared to the year-ago quarter. 8 of the 9 companies reported an increase. Only Cisco reported a YoY decrease. Some of these companies are on a fiscal year, therefore the latest quarter reported for each company is included.
How Tech Performed:
Apple +53.74%
Oracle +36.09%
Qualcomm +34.94%
Google +25.93%
Intel +17.37%
HP +8.63%
IBM +7.08%
Microsoft +6.06%
Cisco -36.33%


Related Story
Largest USA Tech Companies Quarterly Earnings Dip (Charts) *Financial position & performance update*

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Monday, October 24, 2011

Largest USA Tech Companies Quarterly Earnings Dip (Charts) *Financial performance & position update*

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Largest USA Technology Companies
*Updated 10-21-11 for latest quarterly financial results reported*


Largest USA Technology Companies Quarterly Earnings Dip

Largest USA Tech Companies Profits Decrease The 9 Largest USA Tech Companies reported an aggregate quarterly net income of $28.43B through the QE 9-30-11, which is a 2-quarter low. This is a a decrease of -$2.19B and -7.16% in 3 months. Companies reporting quarterly net income decreases were Oracle (-$1.37B), Apple (-$685M), Cisco (-$575M), HP (-$378M), and Microsoft (-$136M). Those reporting increases were Intel (+$514M), Google (+$224M), IBM (+$177M), and Qualcomm (+$36M). As a result, the average return on assets dipped slightly to +15.75% from +15.95%.

Largest USA Tech Companies Assets Increase The 9 Largest USA Tech Companies reported aggregate total assets of $794.55B through the QE 9-30-11, which is the highest in the 5 quarters reviewed. This is an increase of +$16.83B and +2.16% in 3 months. Apple led the way with a +$9.61B increase, followed by Intel +$4.46B and Google +$4.23B. IBM had the largest decrease of -$3.32B followed by Microsoft of -$1.29B. The average capital ratio (total equity divided by total assets) decreased to 55.84% for these companies, compared to 56.57% previously.

Largest USA Tech Companies Market Value Rises The 9 Largest USA Tech Companies aggregate market capitalization rose to $1.525 trillion at October 21, 2011 from $1.487 trillion at September 19, 2011 (the last date measured). This is an increase of +$37.76 billion and +5.54%.

Largest USA Technology Companies: Financial Performance & Position Review*

Largest USA Tech Companies Two ways to rank which technology companies are the Largest USA Tech Companies are by market capitalization and total assets. Below is a review of the Largest USA Tech Companies compared to their peers, the largest technology companies in the United States. These 9 companies are Apple, Microsoft, IBM, Google, Oracle, Intel, Cisco, HP, and Qualcomm. How a "technology company" is defined makes the first difference and how the largest USA technologies companies are measured makes a second difference. The companies included are designated as such in the S&P 500 technology sector.  Notable companies not included are Amazon, EMC Corporation, and telecommunications sub-sector companies.

Largest USA Tech Companies Financial Measurement Five measurements of the 9 Largest USA Tech Companies are reviewed. First is value, ranking by market capitalization. Second is financial position ranking by total assets and capital ratio. Third is financial performance ranking by quarterly net income and annualized return on assets. Some of these companies are on a fiscal year, therefore the latest 5 fiscal quarters for each company is included.

Largest USA Tech Companies by Market Capitalization A measure of the size of a technology company is the valuation of the company by the equity market. The market valuation below is as of the market close on Friday, October 21, 2011 and provides a snapshot. All prior and expected financial performance and position has been priced into the publicly traded stock, along with any other financial system and economic uncertainties to-date. Apple leads all technology companies, and is second in the world,  with a market capitalization of $364.23B. Microsoft is 2nd at $229.03B, IBM is 3rd at $216.92B, Google is 4th at $190.66B, Oracle is 5th at $162.70B, Intel is 6th at $126.18B, Cisco is 7th at $95.59B, Qualcomm is 8th at $86.85B, and HP is 9th at $52.64. The current average market capitalization of the 9 Largest USA Tech Companies is $169.42B. The current aggregate market capitalization of the 9 Largest USA Tech Companies is $1.525 trillion.


Largest USA Tech Companies by Total Assets The size of the financial position of the Largest USA Tech Companies is measured by total assets. By this measure, 4 companies have over $100 billion in total assets at the latest quarter. HP is largest at $124.92B. Apple has moved up to second at $116.37B.  followed by #3 IBM at $110.16B and #4 Microsoft at $107.42B. Next is #5 Cisco at $87.10B, #6 Oracle at $73.86B, #7 Intel at $70.55B, #8 Google at $69.09B, and #9 Qualcomm at $35.10B. The current average assets of the 9 Largest USA Tech Companies is $88.28B. The current aggregate assets of the 9 Largest USA Tech Companies is $794.55B.


Largest USA Tech Companies: Capital Ratio The strength of the financial position of the Largest USA Tech Companies is measured by the basic capital ratio (total equity divided by total assets). By this measurement, Google leads with the strongest capital of 79.36%, followed by Qualcomm at 74.93%, Apple at 65.84%, and Intel at 65.37%. Next are OracleMicrosoft, and Cisco at 55.83%, 55.29%, and 54.26%, respectively. HP is at 31.40% and IBM is last at 20.31%. The current average capital ratio for the 9 Largest USA Tech Companies is 55.84%.


Largest USA Tech Companies: Quarterly Net Income The current profitability of the financial performance of the Largest USA Tech Companies is measured by quarterly net income. By this measure, for the latest quarter, Apple leads with a $6.62B quarterly net income for the latest quarter. Second is Microsoft at $5.74B. IBM is #3 at $3.84B, Intel is #4 at $3.47B, Google is #5 at $2.73B, HP  is #6 at $1.93B, Oracle is #7 at $1.84B, Cisco is #8 at $1.23B, and Qualcomm is #9 at $1.04B. The current average quarterly net income of the 9 Largest USA Tech Companies is $3.16B. The current aggregate quarterly net income for the 9 Largest USA Tech Companies is $28.43B.


Largest USA Tech Companies: Return on Assets Annual return on assets is the ultimate measurement of a technology company's financial performance. Return on assets reveals how effectively assets are being deployed to maximize profits and a 4-quarter moving average is shown on the chart for each company. By this measurement, for the latest quarter, two companies have annual return on assets greater than 20.00%: Apple leads at 27.00%, followed by Microsoft at 23.49%. Next is #3 Intel at 19.58%, #4 Google 16.51%, #5 IBM 14.02%, #6 Oracle 13.00%, #7 Qualcomm 12.70%, #8 Cisco 7.81%, and #8 HP 7.63%. The current average return on assets of the 9 Largest USA Tech Companies is 15.75%. [Note: Return on assets differ from company reports or other sources. A more detailed method is utilized for this chart.]


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Sunday, October 23, 2011

Rackspace to Announce Earnings on Monday, November 7 (Charts) *Financial Performance Review* RAX

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Rackspace (RAX) will report Q3 2011 financial results on Monday, November 7


Rackspace (RAX) to Announce Earnings

Rackspace will report calendar Q3 2011 financial results on Monday, November 7, after market close. The conference call will be at 4:30 p.m. ET.

Rackspace financial performance charts for prior quarters have been posted on the Rackspace Financial Performance page and will be updated for this next quarterly report. The charts are also lower in this post.

Rackspace Future and Past Financial Performance

Earnings per Share
Yahoo Finance Analysts Estimates: $0.14 avg, $0.11 low, $0.15 high, 19 analysts
Prior Quarter: $0.13
Prior Year: $0.09
Rackspace Outlook: not provided

Total Revenues
Yahoo Finance Analysts Estimates: $261.63M avg, $256.58M low, $265.00M high, 18 analysts
Prior Quarter: $247.23M
Prior Year: $199.71M
Rackspace Outlook: not provided

Prior Calendar Q2 2011 Financial Results
When Rackspace reports calendar Q3  2011, the 3 months ended September, financial results on November 7, Rackspace is expected to meet or beat various prior quarterly results. These financial results are charted on the Rackspace Financial Performance page and lower in this post. These prior quarterly financial results were:
GAAP
Total Revenues $247.23 million
Operating Income $28.65 million
Net Income $17.56 million
Earnings per Share $0.13
Cash Flow per Share $0.60
Gross Profit Margin 70.05%
Operating Income Margin 11.59%
Net Income Margin 7.10%

Summary
Overall, Q3 2011 is expected to exceed both prior Q2 2011 and prior year Q3 2010 financial results. For Q3 2011, Rackspace should beat on Total Revenues, Operating Income, Net Income, Earnings per Share, and probably on Cash Flow per Share. Rackspace should meet or be close on Gross Margin, Operating Income Margin, and Net Income Margin. The detailed quarter by quarter charts are on the Rackspace Financial Performance page and below.

Rackspace Reports Record Q2 Earnings!: Total Revenues, Net Income, EPS Up

Rackspace Summary Q2 2011 Revenues continue increasing and operating income and net income kept pace this quarter to all reach record highs. Financial performance is outstanding. Cash flow per share from operations continues strong. Overall financial position is good, but working capital is negative again. This is a liquidity issue not a profitability issue.

Rackspace Income Statement Q2 2011 Rackspace reported record total revenues of $247.23M, record net income of $17.56M, and record earnings per share of $0.13. From the prior quarter Q1 2011, total revenues were up +7%, net income up +27%, and earnings per share yo +30%. From the prior year quarter Q2 2010, these were up an impressive +32%, +57%, and +63%, respectively. Gross, operating, and net margins increased to 70.05%, 11.59%, and 7.10%, respectively. Cash flow from operations dipped to $0.60 per share mostly due to a large increase in Account Receivable. The Operating Expense Ratio (operating expenses divided by total revenues) of 58.46% is within the historical range.

Rackspace Balance Sheet Q2 2011 Rackspace's total assets increased +6.75% QoQ to a record $887.58M from the prior quarter of $831.41M. The capital to assets ratio (total stockholders' equity divided by total assets) is a respectable 57.67% and about the same for the past 3 quarters. The current ratio (current assets divided by total assets) is an illiquid 25.16% and lack of working capital has been a problem for Rackspace the past 3 quarters. Current working capital (current assets less current liabilities) is a negative -3.53M and was negative in the prior quarter Q4 2010 (-3.70M). Rackspace continues with low working capital. This is a liquidity issue, not a profitability issue. The return on assets is low for a technology company, but has consistently grown to the current peak of +7.16%

Rackspace Financial Performance by the Quarters (Charts)

Rackspace Earnings Per Share Below is a chart of quarterly earnings per share. Current Earnings per Share of $0.13 is a very strong +30% QoQ and amazing +63% YoY. EPS has been flat twice, but never decreased since Q3 2009 on the chart below.



Rackspace Cash Flow per Share Below is a chart of cash flow from operations per share. Current Cash Flow per Share of $0.60 is strong and almost double the Q3 2009 of $0.33, the beginning of the chart. Cash Flow did drop from the prior Q2 2011, but this was mostly the result of a large increase in Accounts Receivable.


Rackspace Total Revenues, Operating Income, and Net Income Below is a chart of quarterly total revenues, operating income, and net income. Current Total Revenues of $247.23M are a new all-time high, up +7% QoQ and +32% YoY, and have consistently grown. This is the 3rd consecutive quarter above $200M. Current Operating Income of $28.65M kept pace this quarter with total revenues and is an all-time high. Current Net Income of $17.56M also kept pace this quarter with total revenues and is an all-time high.


Rackspace Gross Margin, Operating Margin, and Net Margin Below is a chart of quarterly gross margin, operating margin, and net margin. Current Gross Margin of 70.05% continues very strong and stable plus is a multi-year, if not all-time, high. Current Operating Margin of 11.59% is historically very strong and is a multi-year, if not all-time, high. This is the 4th consecutive quarter above 10%. Current Net Margin of 7.10% is historically very strong and is a multi-year, if not all-time, high.


Rackspace Return on Assets Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. Rackspace has a historically low ROA for a technology company, but the ROA is consistently increasing QoQ. Current Return on Assets of +7.16% continues the uptrend QoQ, which indicates assets are being more effectively deployed.


Rackspace Growth Rates Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Total Revenues Growth QoQ of +7.49% continue the consistency of being above 7% growth for 3 consecutive quarters and have increased in every quarter on the chart, for 7 quarters, ranging from +4.38% to +7.52%. Earnings per Share Growth QoQ of +30% is a multi-quarter high and have not declined in the past 7 quarters, but have been flat twice (0.00% in Q1 2010 and Q1 2011). For the other 4 quarters, EPS growth has exceeded +10% and ranged from +11.11% to +30.00%.


Rackspace Revenue Sources Below is a chart of quarterly revenues as a percentage of total revenues. The trend is a decrease in Managed Hosting (now 83%) offset by an increase in Cloud (now 17%).


Rackspace Working Capital Below is a chart of working capital (current assets less current liabilities). Current Negative Working Capital of -$3.53 million is a drop from the the Positive Working Capital of prior Q1 2011 of $3.898 million. Rackspace also had Negative Working Capital at Q4 2010 of -$3.697 millionThis is a result mostly of a larger increase in Accounts Payable and Accrued Expenses plus Current Portions of Obligations Under Capital Leases than the increase in Accounts Receivable and other current assets. This is a liquidity issue not a profitability issue.



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