Osprey Flyer: July 2011

Sunday, July 31, 2011

HP Reports Quarterly Earnings on Thursday, August 18 (Financial Charts) Financial Performance Review HPQ

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HP (HPQ) will report QE July 2011 financial results on Thursday, August 18

HP Financial Performance Review

HP will be reporting QE July 2011 financial results on Thursday, August 18. The conference call time has not been announced.

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

The HP financial performance charts are:

HP Performance by the Quarters

Earnings per Share (Diluted)

Cash Flow per Share from Operations (Diluted)

Total Revenues, Operating Income, Net Income

Gross Margin, Operating Margin, Net Margin

Return on Assets

Total Revenues and Earnings per Share Growth Rates
Revenue Sources by Segments
Geographic Revenues
Operating Expense Ratio

HP Future and Past Financial Performance

Earnings per Share

Yahoo Finance analysts' estimates QE July 2011: Non-GAAP $1.09 average, $1.07 low, $1.13 high, 33 analysts

Prior Quarter GAAP QE April 2011: $1.05

Prior Year GAAP QE July 2010: $0.75

HP Outlook GAAP $0.90, Non-GAAP $1.08
The analysts' average Non-GAAP Earnings Per Share estimate for QE July 2011 is $1.09 is reasonable. HP has already announced the GAAP earnings per share is estimated at $0.90, which is a drop from prior QE April 2011 of $1.05.

Total Revenues

Yahoo Finance analysts' estimates QE July 2011: $31.20B average, $30.91B low, $31.63B high, 32 analysts

Prior Quarter QE April 2011: $31.63B

Prior Year QE July 2010: $30.73B

HP Outlook $31.1B to $31.3B
The analysts' average GAAP Total Revenues of $31.20B right in the middle of HP's outlook. HP has already announced the GAAP total revenues is estimated at $31.1B to $31.3B, which is a drop from prior QE April 2011 of $31.63B.

Prior QE April 2011 Financial Results

When HP reports QE July 2011, the 3 months ended July, financial results on August 18, HP is expected to beat, match, or miss various QE April 2011 results. These financial results are charted on the HP Financial Performance page. HP for QE April 2011, the 3 months ended April, financial results were:

GAAP
Total Revenues $31.63B

Operating Income $2.97B

Net Income $2.30B

Earnings per Share $1.05

Gross Profit Margin 24.57%

Operating Income Margin 9.38%

Net Income Margin 7.28%

Summary

HP has already announced through their outlook that QE July 2011 will be a drop from QE April 2011 on both total revenues and earnings per share. For QE July 2011, HP should miss QE April 2011 on Total Revenues, Operating Income, Net Income, and Earnings per Share per their own outlook. HP might be lower QoQ on Gross Margin, but should be close to, and perhaps beat, on Operating Income Margin and Net Income Margin. Any lower on Operating Income Margin and Net Income Margin would create significant uncertainty about HP as these margins are already lower than the historical range. The detailed quarter by quarter charts are on the HP Financial Performance page.

HP Financial Performance by the Quarters (Charts)

HP Earnings Per Share Below is a chart of quarterly earnings per share. Current Earnings per Share of $1.05 are down -10% QoQ and up +15% YoY. The recent peak was prior QE January 2011 of $1.17. The lows have been $0.75 in QE July 2010 and $0.69 in QE July 2009.

HP Cash Flow per Share Below is a chart of cash flow from operations per share. Current Cash Flow per Share of $1.81 is very strong and an 8-quarter high. The peak was $2.04 in QE April 2010. The lows have been QE January 2009 of $0.99 and QE January 2009 of $0.46.

HP Total Revenues, Operating Income, and Net Income Below is a chart of quarterly total revenues, operating income, and net income. Current Total Revenues of $31.63B is a 3-quarter low, down -2% QoQ and up +3% YoY. Total Revenues have generally been stable for the past 7 consecutive quarters, ranging from a low of $30.73B in QE July 2010 to a high of $33.28B in QE October 2010. Current Operating Income of $2.97B is also a 3-quarter low, ranging from a low of $2.32B in QE July 2010 and a high of $3.39B in QE January 2011 in the past 7 quarters. Current Net Income of $2.30B is also a 3-quarter low, down -12% QoQ and up +5% YoY. Net Income has ranged from a low of $1.78B in QE July 2010 to a high of $2.61B in QE January 2011.

HP Gross Margin, Operating Margin, and Net Margin Below is a chart of quarterly gross margin, operating margin, and net margin. Current Gross Margin of 24.57% is above average and the 3rd consecutive quarter above 24% and the 2nd highest on the chart below. Current Operating Margin of 9.38% is slightly below average, a 3-quarter low, and was pulled down mostly by an increase in Selling, General, and Administrative Expenses. Current Net Margin of 7.28% is average and a 3-quarter low. The average income tax rate of 20.33% is about average.

HP 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. Current Return on Assets of +7.61% is historically about average. Return on Assets has been stable in the 7%+ range.

HP Growth Rates Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for total revenues and earnings per share. Current Total Revenues of -2% are the 2nd consecutive decrease and the 4th decrease in the past 5 quarters. Current Earnings per Share of -10% is the first decrease in the past 3 quarters.

HP Revenue Sources Below is a chart of quarterly revenue sources, as a percentage of total revenues. The trend is a decrease in Personal Systems offset by increase in Services and Image, Printing.

HP Geographic Revenues Below is a chart of quarterly geographic revenues, as a percentage of total revenues. For the current quarter, Americas revenues were $13.8B and 44% of total revenues. Europe, Middle East, Africa were $11.7B and 37% and Asia Pacific was $6.1B and 19%. BRIC countries (Brazil, Russia, India, and China) were 12% of total revenues and included within the above totals.

HP Operating Expense Ratio Below is a chart of quarterly operating expense ratio, which is operating expenses divided by total revenues. The current Operating Expense Ratio of 15.19% is above average and a 3-quarter high, indicating a decreased efficiency plus a lower proportion of revenues is reaching the bottom line, net income.

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Thursday, July 28, 2011

Largest USA Tech Companies (Charts) Financial Performance & Position Review

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Largest USA technology companies continue growing and prospering

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 8 companies are Apple, Microsoft, IBM, Google, Oracle, Intel, Cisco, and HP. 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 were Amazon and EMC Corporation and telecommunications sub-sector companies.

Largest USA Tech Companies Financial Measurement Five measurements of the 8 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 4 fiscal quarters are 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 Tuesday, July 26, 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 with a market capitalization of $374.00 billion and is the 2nd largest corporation traded on USA equity markets by market capitalization. Microsoft is 2nd at $236.79 billion (3rd largest of all corporations), IBM is 3rd at $221.56 billion (4th largest), Google is 4th at $200.61 billion (7th largest), Oracle is 5th at $162.83 billion (14th largest), Intel is 6th at $121.39 billion (20th largest), Cisco is 7th at $89.60 billion (30th largest), and HP is 8th at $77.72 billion (35th largest). By market capitalization Apple is well ahead. Microsoft, IBM, and Google are in the next tier, followed by Oracle and Intel. Cisco and HP are the lower tier. The current average market capitalization of the 8 Largest USA Tech Companies is $185.56 billion. The current aggregate market capitalization of the 8 Largest USA Tech Companies is $1.485 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, four companies have over $100 billion in total assets at the latest quarter. HP is largest at $125.13 billion followed by IBM at $113.47 billion. Microsoft is #3 with $108.70 billion and Apple is #4 with $106.76 billion. Next is #5 Cisco at $85.35 billion, #6 Oracle at $73.54 billion, #7 Intel at $66.09 billion, and #8 Google at $64.86 billion. The current average assets of the 8 Largest USA Tech Companies is $92.99 billion. The current aggregate assets of the 8 Largest USA Tech Companies is $743.90 billion.

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 at 80.16%, followed by Intel at 73.72% and Apple at 64.95%. Next are Cisco, Oracle, and Microsoft at 55.31%, 54.73%, and 52.51%, respectively. HP is at 33.40% and IBM is last at 20.45%. The current average capital ratio for the 8 Largest USA Tech Companies is 54.40%.

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 $7.31 billion quarterly net income for the QE 6-30-11. Second is Microsoft at $5.87 billion. IBM is #3 at $3.66 billion, Oracle is #4 at $3.21 billion, Intel is #5 at $2.95 billion, Google is #6 at $2.51 billion, HP is #7 at $2.30 billion, and Cisco is #8 at $1.81 billion. The current average quarterly net income of the 8 Largest USA Tech Companies is $3.70 billion. The current aggregate quarterly net income for the 8 Largest USA Tech Companies is $29.63 billion.

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 27.56%, followed by Microsoft at 24.20%. Next is #3 Intel at 19.56%, #4 Google 16.74%, #5 IBM 13.96%, #6 Oracle 12.75%, #7 Cisco 8.82%, and #8 HP 7.61%. The current average return on assets of the 8 Largest USA Tech Companies is 16.40%. [Note: Return on assets differ from company reports or other sources. A more detailed method is utilized for this chart.]