Big Tech Assets Rise, Apple Reaches Record $163 Billion

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

Total Assets

The Largest USA Tech Companies have reported all-time high aggregate total assets of $940 billion. This is a net increase of +$14 billion and +1.6% from the prior quarter. Apple led the way, and continues pulling away, with another incredible +$11.9 billion quarterly increase, followed by Google (+$8.9 billion), and Microsoft (+$3.3 billion). A huge decrease was reported by HP (-$10.1 billion), followed by Oracle (-$1.8 billion), and IBM (-$1.5 billion).

The $100 Billion Club: For the latest quarter reported, Apple continues #1 and largest at $162.9 billion. Microsoft moved up to #2 at $121.3 billion while HP slipped to third at $117.6 billion. IBM continues at #4 with $113.8 billion. Cisco is #5 at $91.8 billion.

The next group is #6 Google at $86.1 billion, #7 Oracle ($76.6 billion), and #8 Intel ($72.4 billion). Qualcomm and EMC are a more distance #9 and #10 at $42.4 billion and $35.0 billion, respectively. Amazon is last and #11 at $21.0 billion. I have included Amazon because of the Kindle Fire, streaming, cloud services, and the resulting competition with others listed.



Capital Ratio

The Largest USA Tech Companies have reported an average capital to assets ratio of 54.53%, a slight decrease of -0.85% from the prior quarter. Six of the eleven companies reviewed reported increases, led by Intel (+2.3%) and followed by EMC (+0.85%) and Oracle (+0.84%). Google and Microsoft reported the largest decreases at -4.79% and -3.46%, respectively.

For the latest quarters reported, Qualcomm (77%) continues leading Google (75%) to have the strongest capital position. Apple is #3 at 69%, followed closely by Intel at 67%. Next are EMC, Cisco, Oracle, and Microsoft at 63%, 57%, 56%, and 55%, respectively. Amazon is 9th at 36%, followed by HP (27%) and finally IBM (18%) is last and #11.



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

Earnings Reviews

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Google vs Apple: The Amazing Maps Race!

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Google vs Apple: The Amazing Maps Race - Tech Tonic

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Talking Numbers: Buy Apple or Google?

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Oracle Earnings Review: EPS Strengthens, Revenues Weaken, Outlook Stable

Oracle reported QE August 2012 financial results on September 20

Due to Oracle's very cyclical quarterly results, the year over year (YoY) results are the way of keeping score. The score is mixed from this latest quarterly report.

The GAAP earnings per share of $0.41 was an encouraging +13.89% YoY, compared to +11.29% YoY last quarter, which was a 9-quarter low. The downtrend was reversed. The problem is the GAAP EPS outlook for next QE November 2012 of $0.45 to $0.49 or +4.65% YoY to +13.95% YoY. The downtrend will either redevelop or Oracle treads water in a best case scenario. However, the Fed's quantitative easing might just save the day when earnings are reported in December on a weaker US Dollar.

Total revenues were a disappointment, down -2.30% YoY and projected for QE November 2012 at +0% to +5% QoQ.



Strengthening US Dollar: Oracle should benefit next quarter from the Federal Reserve's infinite quantitative easing. For the QE August 2012, "Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q1 GAAP earnings per share would have been $0.03 higher at $0.44, up 24%, and Q1 non-GAAP earnings per share would have been $0.03 higher at $0.56, up 17%. Both GAAP and non-GAAP total revenues also would have been up 3%, GAAP new software licenses and cloud software subscriptions revenues would have been up 10%, non-GAAP new software licenses and cloud software subscriptions revenues would have been up 11% and both GAAP and non-GAAP hardware systems products revenues would have been down 21%."

The long-term trend is clearly upwards as evidenced by the GAAP EPS chart below. However, the strength of the uptrend is weakening. The biggest performance concern is the flat to decreasing YoY growth rates in total revenues and perhaps a resumption of slowing YoY growth rates in earnings per share.

The biggest financial position negative has been the debt. This is now 19% of total assets and at a multi-year low, down from a peak of 26% for the QE August 2010. Financial position continues acceptable with adequate capital, moderate debt, strong liquidity, and an increasing return on assets. Stock repurchasing and dividends are a plus.

GAAP Quarterly Financial Result, QoQ Change, YoY Change
Total Assets: $76.56 billion, -2%, +4%
Revenues: $8.18 billion, -25%, -2%
Net Income: $2.03 billion, -41%, +11%
Earnings per Share: $0.41, -41%, +14%
Cash Flow per Share $1.15
1-Year Return on Assets +13.53%

Oracle Outlook QE November 2012
GAAP and Non-GAAP Total Revenues +0% to +4%
QoQ Non-GAAP EPS of $0.59 to $0.63 = $0.61 avg = +15% QoQ, +13% YoY
GAAP EPS $0.45 to $0.49 = $0.47 avg = +15% QoQ, +9% YoY













Oracle Cloud: "A little more than a week from now we will announce lots of enhancements to the Oracle Cloud," said Oracle CEO, Larry Ellison. "There are more CRM, ERP and HCM applications as a service, and more Oracle database, Java and social network platform services. Our new infrastructure as a service is available in the Oracle Cloud and as a private cloud in our customers’ data center, with the nique ability to move applications and services back and forth between the two. Join us at Oracle OpenWorld for all the details."

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Cramer: Apple vs. Google

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Cramer: Apple vs. Google

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Top 5 Laptops Under $600

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Overall Best Laptop, Any Price: Apple MacBook Pro

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Big Tech Profits Soften: HP, Microsoft, Amazon Plunge!

Net Income: Quarter over Quarter Change

The Largest USA Tech Companies reported softening profits from the prior quarter, which is not unusual this time of year on an annual cyclical basis. Only 3 of the 10 companies reviewed reported sequential quarterly increases (Oracle, IBM, Intel).

First, HP is not included in the chart below. HP, which is among the walking wounded, reported a disastrous quarter and a chart-busting -656% decrease in net income QoQ. HP reported a net loss of -$8.86 billion for their latest quarter, compared to net income of +$1.59 billion in the prior quarter. Including HP skews the chart and obscures the data.

Reporting net income increases quarter over quarter were Oracle (+38%), IBM (+27%), and Intel (+3%). Reporting a decrease in net income from the prior quarter were Google (-4%), Cisco (-11%), Apple (-24%), and Qualcomm (-46%). The Big Losers were Amazon (-95%), Microsoft (-110%), and the aforementioned HP (-656%). The second calendar quarter is typically slower and a quarterly drop for many tech companies in total revenues, net income, and earnings per share.



Net Income: Year over Year Change

The Largest USA Tech Companies reported more positive results from the prior year, compared to the prior quarter. 6 of the 10 companies reviewed reported YoY increases. Cisco (+56%) and Apple (+21%) led the way, followed by Qualcomm (+17%), Google (+11%),  Oracle (+8%), and IBM (+6%). The remainder lost ground and some lost huge territory. Intel (-4%), Amazon (-96%), Microsoft (-108%), and HP (-560%) reported decreases year over year.

HP is not included in the chart below. Including HP skews the chart and obscures the data.



Updated through HP quarterly financial results reported 8-22-12
Next reporting: Oracle in September

Big Tech Assets Rise, Apple Reaches Record $163 Billion

Largest USA Tech Companies Earnings Plunge, But Apple Still Dominates

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SalesForce (CRM) Reports 7th Consecutive Operating Loss, Ongoing Loss per Share

SalesForce reported QE July 2012 financial results on August 23

The quarterly CRM tent revival earnings report and conference call, hosted by CEO Marc Benioff and introduced as in a "good mood", revealed a 7th consecutive quarterly operating loss (-$13.47 million) and 5th consecutive quarterly net loss (-$9.83 million). These are now a cumulative -$71.19 million and -$51.59 million, respectively, since this losing streak began. No matter, CEO Benioff's robust disconnect from reality assures investors there is no trouble in paradise and everything is better everyday everywhere.

GAAP Quarterly Financial Result, QoQ Change, YoY Change
Total Assets: $4.45 billion, +7%, +30%
Revenues: $731 million, +5%, +50%
Net Loss: -$9.83 million, +50%, +130%
Loss per Share: -$0.07, +50%, -133%
Cash Flow per Share $0.98
1-Year Return on Assets -1.20%

The 5th consecutive GAAP loss per share of (-$0.07) for the QE July 2012 was actually an improvement from the prior quarter (-$0.14). SalesForce touts "better" Non-GAAP financial results (see explanation below), which exclude significant, and important, expenses. Please note Apple and Microsoft report only GAAP results and don't even bother with Non-GAAP data. They don't have to. Unless otherwise noted, results below are GAAP. Cutting through the hype, the SalesForce GAAP earnings (loss) per share performance is thus:



The Benioff Accounting Method: "Q2 GAAP net loss per share was ($0.07), and non-GAAP diluted earnings per share was $0.42. The company's non-GAAP results exclude the effects of $85 million in stock-based compensation expense, $20 million in amortization of purchased intangibles, and $6 million in net non-cash interest expense related to the company's convertible senior notes. Non-GAAP EPS calculations are based on approximately 146 million diluted shares outstanding during the quarter, including approximately 3 million shares associated with the company's convertible senior notes. GAAP EPS calculations are based on a basic share count of approximately 139 million shares." In other words, Benioff prefers to exclude his and others stock compensation when he tells you how much money SalesForce is making. If he included these material costs, he'd have to spin a much more complex tale and we would all end up very confused.

(The Good) Marc Benioff is a cloud visionary and evangelist plus a consummate promoter. (The Bad) Translating this to financial performance to maximize shareholder wealth (ours, not his) is unfortunately not part of his divine dispensation. (The Ugly) Shareholders, other than Benioff and his team, are bothersome in his grand revelation.

The gist of CEO Benioff's spiel is ever-increasing revenues, integration of social media into the CRM platform, beating Oracle, promoting his tent revivals (conferences), and a general 'onwards and upwards forevermore' tone, including ultimately $10B annual revenues. Benioff’s enthusiasm and entertainment talent is contagious - you cheer for him and hope he can fulfill his vision, but realize you are not ultimately part of the benefits of that vision. This is the same formula utilized by promoters on the Trinity Broadcasting Network: they talk, you listen, you give, they take.

SalesForce.com (CRM) Outlook QE October 2012 Revenue for the company's third fiscal quarter is projected to be in the range of $773 million to $777 million, an increase of approximately 32% to 33% year-over-year. GAAP net loss per share is expected to be in the range of ($0.26) to ($0.27), while diluted non-GAAP EPS is expected to be in the range of $0.31 to $0.32.











"Our second quarter revenue growth was outstanding at 34% in dollars and 37% in constant currency," said Marc Benioff, Chairman and CEO, salesforce.com. "Salesforce.com's social enterprise strategy is enabling companies to connect with customers, partners, and employees in completely new ways – and it's creating new opportunities for their growth and ours."

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HP Earnings Review: "Early stages of multi-year turnaround"

HP reported QE July 2012 financial results on August 22

I give CEO Meg Whitman the floor to report to us on the quarterly GAAP net loss of -$8.86 billion, "HP is still in the early stages of a multi-year turnaround, and we're making decent progress despite the headwinds. During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change, and improve the balance sheet. We continue to deliver on what we say we will do." Hopefully this is the worst quarterly hit possible and GAAP earnings per share has reached bottom at a staggering -$4.49.

From a non-GAAP (operating) financial standpoint, this was a stable quarter with an earnings per share of $1.00. This compares to the prior quarters of $0.98, $0.92, $1.17, and $1.10.

From a GAAP financial standpoint, see charts below, this quarter was a disaster and the short-term, self-inflicted pain is obvious. Loss per share was an excruciating -$4.49, compared to the prior quarters' earnings per share of +$0.80, +$0.73, +$0.12, and +$0.93. Revenues were a 3-year low of $29.67 billion, which was an additional and slight disappointment. Gross margin of 23.08% was encouraging and comparable to the 3-year average of 23.44%.

The GAAP meltdown was attributable to the Compaq goodwill and intangibles write-downs plus yet more restructuring charges: "GAAP loss per share was $4.49, down from earnings per share (EPS) of $0.93 in the prior-year period. Non-GAAP diluted EPS was $1.00, down 9% from the prior-year period. Third quarter non-GAAP earnings information excludes after-tax costs of $10.8 billion, or $5.49 per diluted share, related to the amortization and impairment of purchased intangible assets, the impairment of goodwill, restructuring charges, acquisition-related charges and charges relating to the wind-down of certain retail publishing business activities, including the previously announced charges related to the impairment of goodwill within HP's Services segment, the restructuring program announced in May 2012, and the impairment of the purchased intangible asset associated with the "Compaq" trade name."

As noted before, the restructuring plan is thus: long-term good with incoming short-term and intermediate-term pain for GAAP earnings. Non-GAAP operating earnings will fare much better.

GAAP Quarterly Financial Result, QoQ Change, YoY Change
Total Assets: $117.56 billion, -8%, -6%
Revenues: $29.67 billion, -3%, -5%
Net Loss: -$8.86 billion, -656%, -560%
Loss per Share: -$4.49, -661%, -583%
Cash Flow per Share $1.44
1-Year Return on Assets -4.44%

HP Outlook (Non-GAAP) QE October 2012 * HP estimates Non-GAAP diluted EPS to be in the range of $1.15 to $1.17. The analysts are estimating $1.18. * HP estimates GAAP diluted EPS to be in the range of $0.71 to $0.73.













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Cisco Earnings Review: Strong Financial Rebound!

Cisco reported QE July 2012 financial results on August 15

CEO John Chambers has navigated Cisco above the financial performance lows of 2011 and this QE July was strong. Chambers has restructured, cut costs, increased dividends, continues stock repurchasing, and has achieved better bottom line results. In fact, this was the best QE July ever reported by Cisco. This is especially encouraging considering this is also typically the weakest quarter on an annual cyclical basis.

Current year on year revenues growth was a somewhat light +4.4%, compared to the recent average of about 6%. The historically volatile YoY earnings per share growth was a very impressive +64%. The prior two quarters have also been solid for YoY EPS at +21% and +48%.

The only real negative was a lower gross margin of 60.61%, a 6-quarter low. This prevented the QE July from being a surprising home run instead of a double off the wall. However, Cisco has rebounded significantly in the past year as evidenced by this being the primary criticism.

GAAP Financial Result, QoQ Change, YoY Change
Total Assets: $91.76 billion, +1%, +5%
Total Revenues: $11.69 billion, +1%, +4%
Net Income: $1.92 billion, -11%, +56%
Earnings per Share: $0.36, -10%, +64%
Cash Flow per Share $0.58
1-Year Return on Assets +9.01%















Cisco Outlook QE October 2012 The guidance is slightly weak QoQ but relatively strong YoY. Revenues continue to slowly grind higher. The QE October earnings per share should normally be a stronger rebound QoQ than forecast by management.
Non-GAAP Earnings per Share: $0.45 to $0.47
Prior Quarter: $0.47
Prior Year: $0.43
Revenues YoY: +2% to +4%

"As a result of our strong performance, continued execution on our plan to deliver profitable growth, and commitment to shareholders, for the full fiscal year, we delivered revenue growth of 7% as well as a record year in revenue and earnings per share," stated Cisco Chairman and CEO John Chambers.

"Our strategy -- delivering intelligent networks and technology architectures, built on integrated products, services and software platforms, to fuel our customers' businesses -- is proving the right long-term strategy for our success. There is no question that our industry and our world are evolving quickly and Cisco is squarely at the center of major technology market transitions -- cloud, mobile, visual, virtual and social."

Chambers Explains Cisco's Earnings John Chambers, Cisco Chairman & CEO, offers insight on the firm's latest quarter. Q4 was unusually strong, he says, particularly in Asia.



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