Through Friday, January 27, 2012, there have been 52 US Big Corps with Pretax Income of just short of $1 bil or above in any of the quarters of 2011 or 2010, which have released their December 2011 quarterly earnings.
Here is the Total Pretax Earnings Growth for these 52 US Big Corps for each of the four quarters of 2011 over 2010:
1Q 2011 over 1Q 2010.....21%
2Q 2011 over 2Q 2010.....21%
3Q 2011 over 3Q 2010.....19%
4Q 2011 over 4Q 2010.....14%
And when you back away Apple, whose $17.5 bil of Pretax Earnings in its December 2011 quarter was a just massive 119% earnings growth over its December 2010 quarter, the remaining 51 US Big Corps had their Total Pretax Earnings Growth drop dramatically from 17% in the 3Q 2011 to only 6% in the 4Q 2011.
This is great for China's economy, where the overwhelming majority of Apple employees are located.
And this is great for Apple's stockholders and executives, and their employees receiving stock options.
Of Apple's $34 bil worldwide pretax earnings in its fiscal year ended September 2011, $24 bil, or 70%, was earned overseas, where it's not just lower labor and lower employee benefit costs, but also just as importantly, substantially lower income tax rates. In fact, its 2011 foreign income tax expense of $602 mil is only a 2.5% effective income tax rate on its $24 bil of foreign pretax income. But at least that is double the 1.2% foreign income tax rate on its foreign pretax income earned in 2010.
Because of these massive amounts of earnings generated predominantly overseas, Apple has accumulated $97.6 bil of Cash and Marketable Securities at the end of December 2011. And Apple has zero of interest-bearing debt.
And at its September 2011 fiscal year end, $54.3 bil, or 67%, of Apple's $81.6 bil of Cash and Marketable Securities were held by its low income taxed foreign subsidiaries.
But there's more to the Apple story.
At the end of December 2011, $20 bil of its Marketable Securities are Investments in US Government Agencies, which I assume is Fannie Mae and Freddie Mac, and $14.7 bil are Investments in US Treasury Securities.
The only reason someone would invest in clearly bankrupt Fannie Mae and Freddie Mac, rather than US Treasury Securities, is because the interest rate earned is much higher.
But bankrupt Fannie Mae and Freddie Mac are in essence US taxpayers. Thus what is in essence happening is that Apple, through its Investments in Fannie Mae and Freddie Mac, is receiving tax benefits from the higher interest yield it is receiving from US taxpayers, who are bankrolling Fannie and Freddie's massive losses.
So, I suggest that when normal US citizens think Apple is doing wonders for the US economy and US job creation, they are flat out wrong. Apple's elevation of the US economy and US job creation has been substantially over exaggerated.
But it's not just Apple. So many US Big Corps have reaped enormous US taxpayer subsidies from their Investments In, and/or Guarantees by, bankrupt Fannie Mae and Freddie Mac over the years.
Big US Financial Corps are really heavy debt instrument investors in bankrupt Fannie and Freddie.
Based on reviewing its 10K footnote disclosures, at December 31, 2010, JPMorgan Chase had Investments in Mortgage-backed US Government Agencies classified as Trading Assets of $48 bil and those classified as Available For Sale Assets of another $120 bil, for a total of $168 bil. I can only assume these are Investments in Fannie and Freddie and/or guaranteed by them. And a lot of these Investments in Fannie and Freddie are financed by the US Government at close to a zero percent interest rate to JP Morgan.
Since Fannie and Freddie are both bankrupt and thus in essence bankrolled by US taxpayers, then effectively US taxpayers are granting substantial annual tax subsidies to JPMorgan Chase for the interest it earns on these massive amount of Investments in Fannie and Freddie.
And to show their incredible greed and selfishness, after getting all of this largesse from US taxpayers, JPMorgan Chase refuses to either reduce the principal balance of underwater home mortgages, or even letting underwater homeowners refinance at the current very low market interest rates!
And at December 31, 2010, Bank of America had Investments in Mortgage-backed US Government Agencies classified as Trading Assets of $30 bil and those classified as Available For Sale Assets of another $191 bil, for a total of $221 bil.
And at December 31, 2010, Citigroup had Investments in Mortgage-backed Debt Securities, which were US Government-sponsored Agency Guaranteed, classified as Trading Assets of $27.1 bil and classified as Available For Sale of another $23.6 bil. In addition, Citigroup had Investments in US Government Agency Debt Securities classified as Trading Assets of $3.4 bil and classified as Available For Sale of another $43.6 bil. Thus the total of all four of these Investments in Debt Securities either of, or guaranteed by, US Government Agencies (logically Fannie and Freddie) was $97.7 bil.
And at December 31, 2010, Wells Fargo had Investments in Mortgage-backed US Government Agencies classified as Available For Sale Assets of $82 bil.
When I get some time, I'll see if I can get a better handle on the aggregate amounts of these tax subsidies given by the US taxpayer to US Big Corps, due to their massive investments in Fannie and Freddie. My hunch is that the cumulative amount is hundreds of billions of dollars.
And these same US Big Corps now want their US Corporate Federal Income Tax Rate reduced? What thoroughly disgusting greed.
And these US Big Corps don't understand why the Occupy Movement is targeting them, especially the Big Banks? The US Congressional Republicans are protecting and covering up the wrongdoings of the Big Banks, while the Occupy Movement courageously and patriotically exposes these wrongdoings. Clearly for the common good, exposure here trumps protection and coverup.
And when you think about it, why shouldn't US Big Corps, who went for, and continue to go for, the higher sticker interest rate earned greed by investing in Fannie Mae and Freddie Mac, be now subject to the same downside risk from these unwise Investments in now bankrupt Fannie Mae and Freddie Mac? Isn't this free enterprise?
What kind of unfair deal is this.....US Big Corps benefit monstrously from their risk-free Investments in Fannie Mae and Freddie Mac, which are in essence tax subsidized by US taxpayers bankrolling bankrupt Fannie and Freddie. But yet bankrupt Fannie and Freddie refuse to either write down the underwater mortgages of these same US taxpayers, or even let them refinance their mortgage loans at the current very low market interest rates.
Anyway, back to the big picture, the overall US economy was clearly under downward real growth assault in the 4Q 2011, especially US small businesses, modestly paid US full-time workers, the rapidly-growing, huge struggling US jobette community, and the so many desperate want-to-be workers.
And this substantial earnings growth deceleration in the 4Q 2011 occurred despite the huge profit boost from 100% first-year tax expensing, due to the substantial pulling forward of future equipment purchases from 2012 to the 4Q 2011, mostly to the month of December 2011. This fine-tuning, financial engineering happened on a whole-scale basis in the 4Q 2011 because the 100% first-year tax expensing drops in half in 2012.
Here are these 52 US Big Corps and their 4Q 2011 Pretax Income as compared to that of the 4Q 2010:
..........................................4Q............4Q..........Increase
........................................2011.........2010......(Decrease)
.........................................PTI.........PTI(L).....Amount......%
........................................(in millions of dollars)......
Apple............................17,477......7,963........9,514......119%
Chevron..........................9,965......8,766........1,199.......14%
Microsoft........................8,239......8,497.........(258)......-3%
IBM................................7,274......6,956..........318........5%
Wells Fargo.....................6,057......5,165..........892.......17%
ConocoPhillips................5,833......4,292........1,541.......36%
JP Morgan Chase.............4,747......7,012......(2,265).....-32%
Intel................................4,587......4,163..........424.......10%
GE...................................4,476......3,540..........936.......26%
Procter&Gamble(1).........4,075......4,090..........(15).......0%
Verizon(2)......................3,823......3,970.........(147)......-4%
AT&T(3)..........................3,681......4,068.........(387).....-10%
JNJ(4)............................3,663......3,451...........212........6%
Google............................3,489......3,142...........347.......11%
Bank of America(5).........3,013.....(1,595).......4,608......289%
Occidental Petroleum.....2,590......1,810...........780.......43%
Abbott Labs(6)...............2,354......2,006...........348.......17%
McDonalds.....................1,984......1,734............250.......14%
Caterpillar......................1,978......1,232............746.......61%
UnitedHealth..................1,935......1,684............251.......15%
Schlumberger.................1,886......1,335............551.......41%
US Bancorp.....................1,855......1,271............584.......46%
United Technologies.......1,832......1,686............146........9%
American Express..........1,748......1,477............271.......18%
Bristol Myers Squibb......1,594......1,413.............181.......13%
Union Pacific..................1,530......1,180............350.......30%
Boeing............................1,444......1,003............441.......44%
Citigroup........................1,364......1,060............304.......29%
Halliburton.....................1,354........910............444.......49%
3M..................................1,329......1,262.............67........5%
Morgan Stanley(7)..........1,285......1,191.............94........8%
Freeport McMoran(8).....1,253......2,986......(1,733).....-58%
Goldman Sachs...............1,247......3,474......(2,227).....-64%
Altria Group...................1,183......1,407.........(224).....-16%
Honeywell(9)..................1,145........930...........215.......23%
Ford(10).........................1,052......1,173.........(121).....-10%
Amgen(11)......................1,051......1,117..........(66)......-6%
EMC................................1,048........909...........139.......15%
General Dynamics(12).....1,022......1,043..........(21)......-2%
Lockheed Martin................966......1,056..........(90)......-9%
Bank of NY Mellon..............945........834...........111.......13%
Colgate Palmolive...............908........889............19........2%
PNC Financial(13)...............838........961.........(123)......-13%
BlackRock...........................815........958.........(143)......-15%
Baker Hughes(14)...............784........520...........264........51%
Travelers...........................778......1,197.........(419)......-35%
Corning(15)........................682........804.........(122)......-15%
Capital One Financial..........571......1,032.........(461)......-45%
WellPoint...........................478........752.........(274)......-36%
DuPont(16)........................422........405.............17.........4%
Texas Instruments.............349......1,104.........(755)......-68%
Hess...................................327........357..........(30).......-8%
Total all 52..................136,325...119,642......16,683.......14%
Total 51 without Apple.118,848..111,679........7,169.........6%
(1) Procter & Gamble 2011 PTI excludes Intangible Asset Impairment Charge and Gain on Sale of Business.
(2) Verizon Communications both 2011 and 2010 PTI exclude Severance, Pension and Benefit Special Charges.
(3) AT&T both 2011 and 2010 PTI exclude Actuarial Losses related to Benefit Plan. Its 2011 PTI also excludes Termination of T-Mobile Acquisition Charge and Directory Asset Impairment Charge.
(4) Johnson & Johnson both 2011 and 2010 PTI exclude Net Litigation Settlement Charges, Special Product Liability Charges, and DePuy Hip Recall Program Charges. Its 2011 PTI also excludes Currency Option Adjustment on Planned Acquisition Charge.
(5) Bank of America both 2011 and 2010 PTI exclude Goodwill Impairment Charges.
(6) Abbott Labs both 2011 and 2010 PTI exclude In Process Research & Development Charges.
(7) Morgan Stanley 2011 PTI excludes Loss Related to MBIA Settlement.
(8) Freeport McMoran 2011 PTI includes Indonesian Operations Labor and Pipeline Disruption Expenses.
(9) Honeywell both 2011 and 2010 PTI exclude Mark-to-Market Pension Expense Charges.
(10) Ford 2011 PTI excludes FordSollers Gain. Its 2010 PTI excludes Debt Reduction Action Charges.
(11) Amgen 2010 PTI excludes Asset Impairment Charge on BI Transaction.
(12) General Dynamics 2011 PTI excludes Intangible Asset Impairment Charge.
(13) PNC Financial 2011 PTI excludes Charges for Redemption of Trust Preferred Securities. Its 2010 PTI excludes Gain on Sale of BlackRock Shares.
(14) Baker Hughes 2011 PTI excludes Trade Names Impairment Charges.
(15) Corning 2011 PTI excludes Asset Impairment Charges. Its 2010 PTI excludes Insurance Settlement Gain and Special Korean Tax Credit.
(16) DuPont 2010 PTI excludes Loss on Debt Extinguishment.
And this massive earnings growth deceleration isn't just related to the above US Big Corps with December 2011 quarter ends.
There were 19 additional US Big Corps with Pretax Income of just short of $1 bil or above in any of the quarters of 2011 or 2010, which have either October or November 2011 quarter ends.
Here is the Total Pretax Earnings Growth for these 19 US Big Corps for each of the four quarters of 2011 over 2010:
1Q 2011 over 1Q 2010.....19%
2Q 2011 over 2Q 2010.....14%
3Q 2011 over 3Q 2010......9%
4Q 2011 over 4Q 2010......1%
Whoa, now that is what I call earnings growth going off the cliff!
Here are these 19 US Big Corps, with either October or November 2011 quarter ends, and their 4Q 2011 Pretax Income or Loss as compared to that of the 4Q 2010:
..........................................4Q............4Q..........Increase
........................................2011.........2010......(Decrease)
.......................................PTI(L).......PTI(L).....Amount......%
........................................(in millions of dollars)......
Walmart...........................5,343.......5,095..........248........5%
Oracle..............................2,960.......2,646..........314.......12%
Hewlett Packard(1)..........2,310.......3,214.........(904).....-28%
Cisco Systems..................2,245.......2,425.........(180)......-7%
Home Depot.....................1,457.......1,306..........151.......12%
Dell..................................1,072.......1,076...........(4).......0%
Deere...............................1,057..........750.........307.......41%
Medtronic(2)...................1,053........1,031...........22........2%
Accenture..........................993...........845..........148.......18%
Walgreens..........................883...........921..........(38)......-4%
Target................................857..........773...........84.......11%
Discover Fincl Svcs............818...........585..........233.......40%
Lowes(3)...........................352...........651.........(299).....-46%
Carnival............................209...........255..........(46).....-18%
Best Buy............................204...........373.........(169).....-45%
Monsanto..........................204.............24..........180......750%
Macys...............................183..............52..........131......252%
Intuit................................(98)...........(111)..........13.......12%
H&R Block.......................(204)..........(184).........(20).....-11%
Total all 19...................21,898.......21,727..........171........1%
(1) Hewlett Packard 2011 PTI excludes asset impairment charge, winding down Web OS device business charge, and acquisition foreign currency exchange risk charge.
(2) Medtronic 2010 PTI excludes special litigation charge.
(3) Lowes 2011 PTI includes large store closing charges.
This huge earnings growth deterioration in the last half of 2011 of US Big Corps with October, November and December 2011 quarter ends is predominantly due to US Congressional Republican action and inaction in purposefully putting the breaks on the US economy and on US job creation, in an attempt to get President Obama voted out of office in November 2012. It's all about protecting the "dollars over decency" philosophy of the 1%.
These US Congressional Republicans have flat out wreaked havoc on the US economy in the last half of 2011, due to their irresponsible actions in both the Grand Bargain Talks Collapse with the Obama Administration and, in the horrific Debt Ceiling Negotiations, which even resulted in the highly embarrassing US Debt Downgrade by Standard and Poors.
And then these US Congressional Republicans piled on by recalcitrantly rejecting on arrival the American Jobs Act, which had some awfully powerful US job creation initiatives, particularly the substantial US infrastructure investments.
When one party purposely acts in such a destructive manner to the US economy and to the 99%, the proper thing that should happen is that every US Republican Congressmen acting in such an unpatriotic manner should immediately resign from Congress, due to their massive harm to the country.
Unfortunately, this isn't going to happen. Thus, there is nothing that the 99% can do now, until they vote in November 2012, except to take to the Streets and protest against these economic injustices.
And it is only logical that key targets of these peaceful protests should include wisely selected US Big Corp executive offices all over the country, and specifically focusing on US Big Corps, which have generated substantial profit increases in the past couple of years, but yet very minor increases in their US full-time payroll counts, and in many cases, even reductions in their US full-time payroll counts, over those same couple of years.
And the 2012 Annual Stockholders' Meeting, usually held in the Spring, when the weather will be much better, would also be a very effective venue for these protests against US Big Corp "Dollars over Decency".
I think a Very Simple Sign something like this one would be most effective.
Front Side in Huge Bold Letters:
.....US Big Corp Name
.....Profit Increase 2009 to 2011
Back Side also in Huge Bold Letters:
.....US Big Corp Name
.....# of US Full-Time Employees Change 2009 to 2011
...........or to simplify....."US Full-Time Jobs Added or Slashed"
In addition, key targets should also include the many far right-wing US Republican Congressmen, K Street and other lobbyists for the 1%, far right-wing State Governors, the many far-right wing State Congressmen, and even the extreme right-wing majority of the US Supreme Court.
