It’s the third week of January 2012 and the New Year celebration is well in the rearview mirror. In an Advantexe Business Simulation exercise, we start all debriefings with a corporate earnings report in the beginning of each year. Just like the simulation world the real world starts the new year with the same.
This week will see a number of key technology organizations release their earnings reports and overall the expectations are kind of in the middle; not too bad…but not great either. I have started to look at a few key organizations as benchmarks or best practice companies when discussing business acumen skills when developing talent for our client organizations. The best practices companies that we analyze include IBM, Intel, Xilinx, Cisco, LinkedIn, and several others since they are leaders in their fields and since they are more closely associated with a B-2-B environment than a more consumer oriented company like Apple.
IBM has been trending down for the past 12 months in terms of market capitalization – a key indicator of future earnings and earnings potential. “The Street” indicates that while averaging about $25 billion a quarter in top line revenue and $3.5 billion in after tax income per quarter is healthy there are concerns about slowing growth.
Intel in the other hand looks to be in the opposite situation in terms of market capitalization. Their value has steadily increased over the past 12 months as revenues and profit has increased quarter over quarter and the trend looks to continue based on their current guidance. The only “negative” trend has been the diminishing operating margin which has been volatile and unfortunately unpredictable. This is based on raw material and labor costs plus impacts of weather related situations in Asia that have disrupted the supply chain.
KEY BUSINESS ACUMEN POINT: Supply Chain Management contingency planning a key part of strategic thinking! Significant impact on costs and earnings.
On July 15, 2011 LinkedIn had a share price of $110 per share. Today it is around $70. Financially, the data (revenues, costs, margins, etc.) are all over the place with the clear perspective that it’s going to be a struggle to actually generate sustainable (and meaningful) earnings. This will be one to watch because of the implications to social media networking companies and ideas and will be a stress test on the entire segment of the US GDP.
