Monday, October 8, 2012

Largest USA Tech Companies Earnings Soften: Apple Dominates, HP Plunges

This is the technology sector reported financial performance going into the October earnings season.

Quarterly Net Income

The Largest USA Tech Companies have reported quarterly aggregate net income of $14.8 billion, which is lower than the prior quarter $35.6 billion. This is a sequential QoQ decrease of -$20.8 billion and -58%! What happened? HP reported an epic quarterly net loss of -$8.9 billion, which offset the Apple quarterly net income of +$8.8 billion. Microsoft reported a rare quarterly net loss of -$492 million. Eight of the eleven companies reviewed reported a QoQ decrease in net income.

A net decrease is not unusual or unexpected as summer is typically a slower financial performance on an annual cyclical basis for the tech sector. But the huge HP and extraordinary Microsoft net losses created a plunge. The only three sequential QoQ increases were IBM (+$816 million) and Intel (+$89 million) and EMC (+$63 million).

For the latest quarters reported, Apple continues dominating with an incredible $8.82 billion quarterly net income. Second was IBM at $3.88 billion, third was Intel at $2.83 billion, and fourth was Google with $2.79 billion. Apple earned more than #2 IBM and #3 Intel combined.

The rest of the pack follows with #5 Oracle at $2.03 billion, #6 Cisco at $1.92 billion, #7 Qualcomm at $1.02 billion rounding out the Billion Dollar Club. Trailing are #8 EMC at $689 million and #9 Amazon at a mere $7 million. Further behind are #10 Microsoft at a dismal net loss of -$492 million and #11 HP with the aforementioned epic loss of -$8.86 billion. Apple comprises approximately 60% of the total quarterly net income of the 10 tech companies listed!

Return on Assets

The Largest USA Tech Companies have reported an average return on assets of +12.29%, a multi-quarter low and -1.68% decrease from the prior quarter. Seven of the eleven companies reviewed reported decreases. The largest sequential QoQ decreases were HP (-8.564%), Microsoft (-6.42%), and Apple (-2.08%). The only significant sequential QoQ increase was Cisco (+0.65).

For the latest quarters reported, Best of Breed goes to Apple with a commanding and incredible lead of at +29.70% ROA. Apple is distantly followed by Intel (+17.61%), Qualcomm (+15.26%), and Google (+15.02%), and Microsoft (+14.95%). Next are #6 IBM (+14.30%), and #7 Oracle (+13.53%).

Significantly lagging the field are #8 Cisco at +9.01% and #9 EMC at +8.42%. Amazon is #10 and a much lower +1.82%. Finally, HP is last and #11 at a negative -4.44%.

I have included Amazon because of the Kindle Fire, streaming, cloud services, and the resulting competition with others listed.

Status Updated through Oracle quarterly financial results reported 9-20-12
Next reports: October earnings season


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