The Innovation Index Weekly Report for 02-07-07

The Innovation Index was dragged down 1% for the week ending February 7, 2007. The Innovation Index closed at 71.06 points, up 2% in 2007, and in a virtual tie with Dow Jones Index and S & P 500. NASDAQ leads all indices with 3% gains in 2007.



9 of the top 20 innovators gained ground last week, 6 innovators went in the red, and 5 were unchanged.

Weekly Advances

The big movers of the week were Research In Motion (NASDAQ: RIMM), Cisco Systems (NASDAQ: CSCO) and Yahoo! Inc. (NASDAQ: YHOO) gaining 7%, 6% and 6% respectively. Cisco announced solid financial results for the quarter, raised the guidance, and announced key innovations (below). Yahoo! is on a tear this year, and everything it touches turns into gold. Watch out for Yahoo! to have a breakout year. Yahoo! is already up 17% in 2007. Research In Motion is back after spending much of January in doldrums. RIMM us now up 7% in 2007.

Weekly Declines

The big declines of the week came from Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and Starbucks (NASDAQ: SBUX) losing 6%, 5% and 4% respectively. Whereas GOOG was down 6% last week, YHOO was up 6%. Google had an excellent quarter; yet the investors are a bit wary of the future. Also, the YouTube services' removal of Viacom videos created a publicity nightmare for Google. However, Google will bounce back. Microsoft was down 5% after the biggest launch in the history of Windows Vista. Why is this the case? For a related story on the Top Five Vista Stumbles, click here. Starbucks had another solid quarter; yet the investors are a bit skeptical on the outlook.

Yearly Leaders & Laggards

Yahoo!, eBay Inc. (NASDAQ: ebay) and Target Corp. (NYSE: TGT) lead all innovators in 2007 with yearly gains of 17%, 11% and 10% respectively. Starbucks, 3M (NYSE: MMM) and Dell Inc. (NASDAQ: DELL) are the early laggards at 5%, 4% and 5% respectively. Michael Dell has become the CEO of Dell again. What will be his recipe for change and turnaround? I posted my opinion on How Dell can turnaround Dell, beat HP and become the number one computer company again.

Weekly Innovation Review at the Top Innovators

3M (NYSE: MMM) introduced a robust, secure and flexible 2mm Latch/Eject Headers for Wire to Board Applications, saving Circuit Board ``Real Estate'' and permitting more signals in smaller space. 3M acquired Accuspray Application Technologies Inc., a manufacturer of spray paint equipment with a wide array of spray guns for architectural, automotive refinishing, industrial and woodworking applications. 3M also acquired the Rite-Lok global industrial adhesives product line from Chemence Inc., a specialty chemical company that manufactures a range of consumer and industrial adhesives. According to 3M, "Complementary acquisitions such as this support 3M's growth strategy to expand its core adhesives business."

America Movil (NYSE: AMX), benefiting from the rise in Mexico stock market, is expected to report lower fourth-quarter net profit next week as a tax gain of 8.6 billion pesos ($781.6 million) the year before makes for tough year-on-year comparisons. Millions of Mexicans had their cellphone conversations put on hold for much of Tuesday after a technical fault in western Mexico City saturated the Telcel cellphone network, Mexico's largest and owned by Slim's telecommunications giant America Movil. America Movil added 10.8 million subscribers in the latest quarter, bringing the total subscriber base to124.8 million. The net gain in customers included 8.7 million from "organic growth" and 2.1 million acquired with Verizon Communications Inc.'s operations in the Dominican Republic.

Apple Inc. (NASDAQ: AAPL) will resell Digital Music Group Inc. (DMGI) recordings and music video content in a contract the companies renewed last week. Chief Executive Steve Jobs on Tuesday called on the four major record companies to start selling songs online without copy protection software known as digital rights management (DRM). "If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies," he said in the statement. IAC/Interactive Corp.'s (IACI) Ticketmaster is partnering with Apple Inc.'s (AAPL) iTunes to offer customers a free song with every concert ticket purchased.

Amazon.com (NASDAQ: AMZN) and TiVo Inc. (NASDAQ: TIVO), the creator of and a leader in television services for digital video recorders (DVRs), announced "Amazon Unbox on TiVo," a soon-to-be-launched service feature that will provide TiVo subscribers with the ability to rent and purchase movies and television shows from leading studios and networks including CBS, Fox Entertainment Group, Lionsgate, Paramount Pictures, Universal Studios Home Entertainment and Warner Bros. Entertainment. Amazon.com posted 23 cents vs. 47 cents fourth quarter EPS as higher costs and income tax expense offset a 34% sales rise. The company announced that the first-day advance orders for "Harry Potter and the Deathly Hallows," the seventh and last installment of J.K. Rowling's successful book series, were 547 percent higher than for its predecessor. Company executives believe the company's new product categories are scaling well and will eventually provide some relief for its squeezed profit margins.

Cisco Systems (NASDAQ: CSCO) announced two significant innovations to its Internet Protocol Next-Generation Network (IP NGN) architecture: a Mobile Transport over Pseudowires (MToP) solution and an enhanced Cisco Content Services Gateway. Cisco shares rose on solid results and raised forecast, and helped stage a rally for NASDAQ. CEO John Chambers tells the analysts that Cisco is gaining market share from competitors. Pacific Internet Ltd.'s (PCNTF) Thai unit and Cisco Systems Inc. (CSCO) are collaborating to offer an Internet protocol-based program for small-and-medium sized businesses in Thailand. Cisco also announced significant new capabilities for enhanced collaboration among several products and services in its security portfolio, simplifying the ability for organizations to control and contain information security threats in a more coordinated, flexible fashion across networks while streamlining management and protecting confidential communications to remote users. Video applications such as Internet Protocol (IP) video, IPTV and telepresence on the campus network help customers increase productivity while reducing operating costs. Cisco(R) announced new Cisco Catalyst(R) switch offerings that aim to ensure these new real-time bandwidth intensive services are delivered with the highest performance, availability, quality of service and maximum security.

Dell Inc. (NASDAQ: DELL) began selling flat-panel televisions from rival electronics manufacturer Sony Corp. (SNE) and said it would soon offer products from a variety of companies as it tweaks its consumer business strategy. Dell and Absolute Software have teamed to provide notebook computer theft recovery services for Dell's U.S. consumer customers. The move makes Dell the first PC manufacturer to deliver a higher degree of peace of mind by combining theft recovery measures with accidental damage protection. Michael Dell takes over the role of the CEO of Dell Inc. again. How can Dell turnaround Dell? I posted my opinion on this last week.

Online auctioneer EBay Inc. (EBAY) has received antitrust clearance from the Federal Trade Commission to acquire privately held StubHub, an online marketplace for the resale of event tickets, for about $310 million in cash. eBay is in talks to supply electronic payments and auction features to the popular MySpace social network and other New Corp.'s online properties, according to people familiar with the situation. eBay rolled out a service for U.S. auto dealers intended to drive a tenfold increase in the inventory of cars available for purchase on its Web site.

GE Capital, unit of General Electric Co. (NYSE: GE), will purchase stakes in Sanyo Electric Credit Co. Ltd. from Sanyo Electric Co. Ltd. and Goldman Sachs for about 45 billion yen ($372.4 million), sources close to the matter said. GE Consumer & Industrial's drive to innovate and lead the way to general illumination with white, light-emitting diode (LED) solutions--on a global scale in commercial, industrial and residential settings--kicks off with a symbolic and meaningful name change. Going forward, GELcore, LLC, will operate as Lumination, LLC. The new name reflects the fast-growing business unit's vision of imagination with light, and embraces GE's heritage of innovation and optimism for the future. GE Healthcare announced today that it has completed a license agreement with Applied Biosystems, granting Applied Biosystems access to GE Healthcare patents for the biomagnetic isolation of nucleic acids. GE Energy Financial Services announced that it is entering the European water market and expanding into industrial water treatment by buying a majority of the assets of Idex AQUASERVICES in France. GE Energy Financial Services is acquiring a 95 percent stake, including debt obligations, from Idex AQUASERVICES -- a developer, owner and operator of facilities that purify water for the food, beverage and cosmetics industries. GE Fanuc Embedded Systems, a leading provider of embedded military and commercial solutions, expands their already extensive line of network products with the introduction of the rugged RES-110 Layer 2 and 3 managed Ethernet switch. GE Money's Sales Finance unit and Bath and Kitchen Buying Group, the industry's only member-owned buying group, today announced a new relationship to provide private label revolving and installment credit options through GE's REFINEDesign and PROJECTLOAN(SM) programs.

Princeton University has become the 12th major library system to join Google's (NASDAQ: GOOG) ambitious, sometimes-controversial project to scan the world's great literary works and make them searchable over the Web. Google Checkout has offered last minute promotions for Valentine's day. "Google Checkout adoption rates exceeded our expectations in Q4," finance chief George Reyes said on an earnings conference call with Wall Street analysts. Google introduced Checkout, which competes with eBay Inc.'s (EBAY) dominant PayPal service, in June, 2006. Google shares weighed down owing to news surrounding removal of all Viacom videos from the YouTube service, and earnings report that showed solid gains, triple the profits, and yet made some investors jittery (inspite of all the upgrades).

Hewlett-Packard Co. (NYSE:HPQ) announced that its redesigned print cartridge packaging for North America will reduce greenhouse gas emissions by an estimated 37 million pounds in 2007 - the equivalent of taking 3,600 cars off the road for one year. Wal-Mart Stores Inc. introduced a test version of its new video download service, making it the first major retailer to offer such a service with the backing of all of Hollywood's big studios, powered by HP. HP expanded the color printing portfolio targeting small businesses, including the introduction of the world's fastest desktop all-in-ones. HP signed a definitive agreement to acquire Bristol Technology Inc., a private company that provides technology to monitor business transactions. HP announced new storage offerings to help enterprise customers consolidate, virtualize and secure their storage environments.

Amdocs (NYSE: DOX), the leading provider of software and services to enable integrated customer management and the intentional customer experience(TM), and IBM (NYSE: IBM) announced a global alliance to address the next-generation networks (NGN) transformation needs of service providers in the telecommunications industry. IBM announced the industry's most comprehensive range of resources for business partners using open source technologies. IBM will provide companies with free access to its sales, marketing and technical consultants, allowing them to bring their offerings to market more quickly and expand into new markets. IBM announced expanded scalability enhancements to the industry's most powerful virtualization technology z/VM. The company revealed a new software technology from its Research labs designed to greatly enhance security and management capabilities in virtualized data centers. IBM launched a new partner program to serve select sub-industries to drive business for its partners while speeding customer implementations with specialized, local knowledge.

Credant Technologies(R), the market leader in mobile data protection solutions, is teaming with Intel Corporation (NYSE: INTC) to bolster data security using Intel(R) vPro(TM) technology.

Microsoft Corp. (NASDAQ: MSFT), with its new operating system called Windows Mobile 6, is promising improved search, better security and tighter integration with Windows Live services, CNET News.com reported in its Thursday editions. Microsoft unveiled products and initiatives designed to allow consumers to access, share and use corporate and personal information more securely against phishing and other identity-theft scams. Microsoft announced the first Microsoft(R) Certified Professional (MCP) exam for IT and hosting professionals to gain Microsoft Certified Technology Specialist status in Configuring and Managing Windows Server(R) 2003 Hosted Environments. In an effort to drive technology innovation to automotive dealerships worldwide, Microsoft launched the Microsoft(R) Automotive Retail Solutions Initiative, unveiling key alliances as part of a new partner ecosystem providing dealer management solutions. Microsoft Corp. also announced the general availability of Intelligent Application Gateway (IAG) 2007.

P&G Professional Care (NYSE: PG) today announced an expanded relationship with Beauty Systems Group (BSG) in the North American professional salon market. Crest and Oral-B have partnered with Scientific American magazine to present the most comprehensive information and expert opinions regarding the relationship between oral health and whole body wellness, including potential implications for future health care models.

BlackBerry maker Research In Motion (NASDAQ: RIMM) won a second victory in a key UK patent lawsuit on Wednesday that had threatened the future of BlackBerry's e-mail service in Britain. 30 Second Software, Inc., an innovator in mobile commerce technology and services, announced "Digby," an electronic commerce service that radically simplifies the buying experience by combining rich content from name-brand retailers with an intuitive shopping process that is optimized for mobile devices - available first on BlackBerry(R) handsets from Research In Motion.

For the first time ever, Southwest Airlines (NYSE: LUV) Vacations is launching a nationwide sale offering 50 percent off vacation travel packages for a party of two adults. Starting February 9, 2007, book a two to five night air/hotel package to a valid destination, staying at a Hilton, Hyatt, or Holiday Inn, and the second adult in your room travels free! Rapid Rewards Members who book travel online to or from any of Southwest's eight California cities by March 8, 2007, will receive double credit in Southwest's award-winning frequent flyer program, Rapid Rewards. Southwest has now released airfares and flight schedules for travel through August 24, 2007, forcing the major airlines to match fares as low as $198 to $218 roundtrip for coast-to-coast travel. Southwest also announced the addition of several new flights giving Customers more choices for their summer travel plans. Southwest Airlines is adding new flights in several key Southwest cities such as Denver, Baltimore/Washington, and Chicago Midway. Southwest Airlines and Chase Card Services, a division of JPMorgan Chase & Co. (NYSE:JPM), today introduced the new Rapid Rewards Visa Signature(R) and Visa(R) Business Card products. Nintendo and Southwest Airlines are giving some of the airline's most-traveled flyers a surprise gift, and we're not talking peanuts here. Fifty of Southwest's Rapid Rewards Members have been mailed a Nintendo DS(TM) Lite and a copy of Brain Age(TM): Train Your Brain in Minutes a Day, marking the first time that Southwest has partnered with an outside company to provide a special treat for Rapid Rewards Members.

Starbucks (NASDAQ: SBUX) Entertainment announced today that it will release a CD of 15 original tracks by Starbucks partners (employees). The first-of-its-kind compilation called "Off the Clock Vol. 1: New Music from Up & Coming Starbucks Artists" is the result of a company-wide contest that invited Starbucks partners to submit original solo or band recordings. Starbucks profits jumped nearly 18% in the latest financial quarter, topping analyst estimates.

Target shares (NYSE: TGT) hit all-time high at $63.07. Target January sales rose 5.1% owing to cold weather. Target Corp will release exclusive CDs by artists like Kenny Loggins and David Cassidy in the latest example of stars "of a certain age" bypassing music labels to partner directly with retailers. Target announced that it is constructing a food distribution center in Lake City, Florida to supply frozen, refrigerated and fresh produce to stores in the Southeast.

Wal-Mart Stores Inc. (WMT) said same-store sales rose 2.2% in January. Wal-Mart Stores Inc.'s entry into movie downloading should have a bigger impact on the growth of digital video distribution in the near term than on the ultimate decline in DVD sales. Wal-Mart Stores announced the selling of downloads of movie and television shows on its Web site putting the firm in competition with Amazon.com and Apple's iTunes. Walt Disney Co. , Time Warner Inc.'s Warner Brothers, Viacom Inc.'s Paramount Pictures, Sony Corp. , News Corp.'s 20th Century Fox, and Universal Pictures, a unit of NBC Universal, which is a subsidiary of General Electric Co. are inking the deals with Wal-Mart. Wal-Mart Chief Executive Lee Scott unveiled a new "Sustainability 360" environmental plan on Thursday, challenging employees, suppliers and customers to remove nonrenewable energy from their lives.

Yahoo Inc. (YHOO) and General Motors Corp. (GM) introduced a new Web site called Pontiac Underground, the first of an expected string of sites touting non-entertainment brands. The Web site, now part of Yahoo's autos section, is geared towards Pontiac enthusiasts and is a mash-up of several of Yahoo's social media features, including its photo uploading Flickr, Yahoo Answers, and Yahoo Video. EMI announced that it has put out songs from three artists: Norah Jones, Relient K and Lily Allen. Jones and Relient K songs were sold in open format on Yahoo Inc.'s music site, and Allen's tunes were made available through a preordering system via text messages. Yahoo Inc. said it planned to build individual Web sites around 100 entertainment "brands" this year that would pull together content from Yahoo's online properties, The New York Times reported. Yahoo! launched the early version of Panama.

Download Apple's Innovation Strategy and Learn how Steve Jobs made Apple the #1 Innovative company in the world.



References:
Reuters
Dow Jones Newswire
Marketwatch
New York Times

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 is even more impressive, and has returned 174% over the last five years. This assumes equal investment in each stock of The Innovation Index.

The alphabetical list of the top 20 Innovators of The Innovation Index along with their stock ticker symbols is presented below:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movile - (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 began investing in the Innovators comprising The Innovation Index starting in 2007.

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