I am including a handful of Foreign-owned Corps here, since they have substantial operations in the US.
In determining Pretax Income, I am excluding some items which are large relative to the Pretax Income amount. Thus, items such as Asset Impairments, and Gains and Losses Related to Both Debt Retirements and Asset Dispositions are excluded.
These 69 US Big Technology Corps had Total Pretax Income of $56.9 bil in the 1Q 2012, a respectable 15% increase over the 1Q 2011.
But the problem with this 15% increase is that it's more than all due to one company.....Apple. And 70% of Apple's Worldwide Pretax Income in the most recent fiscal year was earned overseas. Thus, the positive impact of Apple's earnings growth on the US economy and on US job creation is not robust.
The salient Bifurcation here is Apple and everybody else.
Apple generated Pretax Income in the 1Q 2012 of $15.5 bil, an increase of $7.6 bil, or an off-the-charts increase of 97% over the 1Q 2011.
The Remaining 68 US Technology Corps actually had their Total Pretax Income in the 1Q 2012 decline by 1% as compared to the 1Q 2011. No, I'm not kidding. Their Total Pretax Income was $41.4 bil in the 1Q 2012 as compared with a higher $41.8 bil in the 1Q 2011.
And then when you analyze the profit of the individual companies in the Remaining 68, there is one clear conclusion.....The higher the Pretax Income, the higher the percentage growth.
And this conclusion is pretty pronounced.
The 9 Technology Corps, other than Apple, with Pretax Income above $1 bil in the 1Q 2012, generated Total Pretax Income of $28.2 bil in the 1Q 2012, an increase of 6% over the 1Q 2011.
The 13 Technology Corps, with Pretax Income between $200 mil and $1 bil in the 1Q 2012, generated Total Pretax Income of $7.1 bil in the 1Q 2012, an increase of 2% over the 1Q 2011.
But here's the real kicker. The 35 Technology Corps, with Pretax Income between $0 and $200 mil in the 1Q 2012, generated Total Pretax Income of $4.2 bil in the 1Q 2012, a decrease of a massive 29% as compared with the 1Q 2011. And 23 of these 35 Technology Corps, or 66% of them, had Pretax Income declines in the 1Q 2012!
Clearly, substantial economic fiscal stimulation is needed for the smaller Technology companies, like these latter 35 companies. Giant Technology companies like Apple don't need the economic stimulation.
These smaller Technology companies are the ones that create the US jobs. But they are not going to do it, if they experience a 29% Profit decline in 2012.
Thus, I think the proper focus has to be on how best to wisely increase the earnings of these smaller Technology companies in the remainder of 2012.
I think by far the most important thing to do is to extend the 100% first-year tax expensing of equipment and computer software investments made in the remainder of 2012. The CBO-scored cost should not be very significant.
And I think the second most important thing to do is to Pass the Research and Experimentation Tax Credit for businesses for all 2012 expenditures, but substantially enhance it for smaller businesses, and simplify it.
Third, these smaller Technology companies should receive a 10% tax credit for all US jobs they create in 2012.
Fourth, these smaller Technology companies should be allowed a 20% income tax credit for the expenses of moving their operations from overseas back to the US. And pay for this by removing income tax deductions all businesses now get for moving their production from the US to overseas. This one's pretty cool, where the pay-for is also positive to the US job count.
Fifth, these smaller Technology companies, should be allowed to substantially accelerate first-year tax depreciation on all new building and building remodeling investments made in the remainder of 2012, and rein in its CBO-scored cost, by lowering tax depreciation on these same investments in years 2 through 10.
And sixth, these smaller Technology companies, but not the larger ones, should be allowed to repatriate their foreign earnings at a somewhat discounted US federal income tax rate, for the rest of 2012, if they use the proceeds to invest in either Research and Experimentation, in Capital Expenditures, or in any Computer Software, including Web Design, in 2012.
The practical way to make the sixth one above work well is to permit all companies, large and small, to repatriate foreign earnings up to a maximum amount, such as $500 mil to $1 bil, for the rest of 2012, at a somewhat discounted US federal income tax rate. And this one is a significant pay for. Thus, I would use the US government tax proceeds raised here to fund the above first five stimulus measures, and also to fund primarily near-term, job-creating School Construction Fix-ups, and secondarily some additional job-creating US Infrastructure investments.
And frankly, I think what you are going to see is that it is not just the smaller Technology companies which have had their earnings either decline, or their earnings growth substantially decelerate, in the 1Q 2012. It's probably also the bulk of the smaller manufacturing non-technology companies.
Thus, I would also give all smaller Manufacturing companies the same six above economic fiscal stimulus measures that I would give to the smaller Technology companies.
Below here in the first presentation is the Pretax Income (PTI) or Pretax Loss (PTL) in both the 1Q 2012 and 1Q 2011 for each of these 69 US Technology Corps. The second presentation below here shows a stratification of this same information by different 1Q 2012 Pretax Income ranges.
| Increase | Increase | |||
| PTI | PTI | (Decrease) | (Decrease) | |
| 1Q 2012 | 1Q 2011 | Amount | % | |
| mils $s | mils $s | mils $s | ||
| Technology | ||||
| Apple | 15,532 | 7,900 | 7,632 | 97% |
| Remaining 68 | ||||
| Microsoft | 6,363 | 6,025 | 338 | 6% |
| IBM | 3,836 | 3,817 | 19 | 0% |
| Intel | 3,814 | 4,371 | (557) | -13% |
| 3,545 | 2,892 | 653 | 23% | |
| Oracle | 3,148 | 2,799 | 349 | 12% |
| Cisco Systems | 2,749 | 1,730 | 1,019 | 59% |
| Hewlett Packard | 1,821 | 3,297 | (1,476) | -45% |
| Qualcomm | 1,734 | 1,619 | 115 | 7% |
| Seagate Technology | 1,159 | 122 | 1,037 | 850% |
| Dell | 907 | 1,127 | (220) | -20% |
| Accenture | 899 | 774 | 125 | 16% |
| EMC | 817 | 624 | 193 | 31% |
| Automatic Data Processing | 686 | 653 | 33 | 5% |
| Ebay | 684 | 568 | 116 | 20% |
| Western Digital | 538 | 159 | 379 | 238% |
| Activision Blizzard | 514 | 676 | (162) | -24% |
| 382 | 398 | (16) | -4% | |
| Texas Instruments | 362 | 918 | (556) | -61% |
| Electronic Arts | 361 | 149 | 212 | 142% |
| Cognizant Technology | 322 | 281 | 41 | 15% |
| Xerox | 313 | 350 | (37) | -11% |
| Thermo Fisher Scientific | 305 | 299 | 6 | 2% |
| CA | 290 | 289 | 1 | 0% |
| KLA Tencor | 274 | 302 | (28) | -9% |
| Adobe Systems | 270 | 286 | (16) | -6% |
| Agilent Technologies | 256 | 198 | 58 | 29% |
| Motorola Solutions | 244 | 172 | 72 | 42% |
| Priceline | 229 | 141 | 88 | 62% |
| VMware | 224 | 156 | 68 | 44% |
| Harris Corp | 221 | 209 | 12 | 6% |
| Paychex | 212 | 200 | 12 | 6% |
| Check Point Software | 183 | 152 | 31 | 20% |
| Flextronics | 181 | 153 | 28 | 18% |
| Analog Devices | 180 | 259 | (79) | -31% |
| Intuit | 179 | 102 | 77 | 75% |
| Yahoo | 172 | 195 | (23) | -12% |
| SAIC | 172 | 192 | (20) | -10% |
| Sandisk | 167 | 331 | (164) | -50% |
| Symantec | 165 | 223 | (58) | -26% |
| Applied Materials | 159 | 680 | (521) | -77% |
| Broadcom | 157 | 233 | (76) | -33% |
| Xilinx | 156 | 169 | (13) | -8% |
| Roper Industries | 154 | 126 | 28 | 22% |
| NetApp | 147 | 213 | (66) | -31% |
| Cerner | 130 | 96 | 34 | 35% |
| Linear Technology | 129 | 171 | (42) | -25% |
| Teradata | 126 | 90 | 36 | 40% |
| Nvidia | 125 | 129 | (4) | -3% |
| Verisk Analytics | 123 | 110 | 13 | 12% |
| Jabil Circuit | 122 | 103 | 19 | 18% |
| Altera | 118 | 245 | (127) | -52% |
| Amdocs | 115 | 107 | 8 | 7% |
| Maxim Integrated Products | 112 | 162 | (50) | -31% |
| F5 Networks | 106 | 85 | 21 | 25% |
| Tech Data | 105 | 109 | (4) | -4% |
| BMC Software | 102 | 144 | (42) | -29% |
| Garmin Ltd | 100 | 97 | 3 | 3% |
| Microchip Technology | 92 | 120 | (28) | -23% |
| Amazon.com | 84 | 307 | (223) | -73% |
| Lexmark | 82 | 106 | (24) | -23% |
| Marvell Technology | 75 | 226 | (151) | -67% |
| Lam Research | 55 | 199 | (144) | -72% |
| Novellus Systems | 51 | 113 | (62) | -55% |
| Vishay Intertechnology | 47 | 118 | (71) | -60% |
| Groupon | 31 | (117) | 148 | 126% |
| Juniper Networks | 23 | 171 | (148) | -87% |
| First Solar | (111) | 133 | (244) | -183% |
| Micron Technology | (200) | 158 | (358) | -227% |
| Total Remaining 68 | 41,393 | 41,811 | (418) | -1% |
| Total all 69 | 56,925 | 49,711 | 7,214 | 15% |
| 1Q 2012 Pretax Income Stratification Ranges | ||||
| 1Q 2012 PTI>$1 Bil | ||||
| Microsoft | 6,363 | 6,025 | 338 | 6% |
| IBM | 3,836 | 3,817 | 19 | 0% |
| Intel | 3,814 | 4,371 | (557) | -13% |
| 3,545 | 2,892 | 653 | 23% | |
| Oracle | 3,148 | 2,799 | 349 | 12% |
| Cisco Systems | 2,749 | 1,730 | 1,019 | 59% |
| Hewlett Packard | 1,821 | 3,297 | (1,476) | -45% |
| Qualcomm | 1,734 | 1,619 | 115 | 7% |
| Seagate Technology | 1,159 | 122 | 1,037 | 850% |
| Total all 9 | 28,169 | 26,672 | 1,497 | 6% |
| 1Q 2012 PTI $200 Mil to $1 Bil | ||||
| Dell | 907 | 1,127 | (220) | -20% |
| Accenture | 899 | 774 | 125 | 16% |
| EMC | 817 | 624 | 193 | 31% |
| Automatic Data Processing | 686 | 653 | 33 | 5% |
| Ebay | 684 | 568 | 116 | 20% |
| Western Digital | 538 | 159 | 379 | 238% |
| Activision Blizzard | 514 | 676 | (162) | -24% |
| 382 | 398 | (16) | -4% | |
| Texas Instruments | 362 | 918 | (556) | -61% |
| Electronic Arts | 361 | 149 | 212 | 142% |
| Cognizant Technology | 322 | 281 | 41 | 15% |
| Xerox | 313 | 350 | (37) | -11% |
| Thermo Fisher Scientific | 305 | 299 | 6 | 2% |
| Total all 13 | 7,090 | 6,976 | 114 | 2% |
| 1Q 2012 PTI $0 to $200 Mil | ||||
| Check Point Software | 183 | 152 | 31 | 20% |
| Flextronics | 181 | 153 | 28 | 18% |
| Analog Devices | 180 | 259 | (79) | -31% |
| Intuit | 179 | 102 | 77 | 75% |
| Yahoo | 172 | 195 | (23) | -12% |
| SAIC | 172 | 192 | (20) | -10% |
| Sandisk | 167 | 331 | (164) | -50% |
| Symantec | 165 | 223 | (58) | -26% |
| Applied Materials | 159 | 680 | (521) | -77% |
| Broadcom | 157 | 233 | (76) | -33% |
| Xilinx | 156 | 169 | (13) | -8% |
| Roper Industries | 154 | 126 | 28 | 22% |
| NetApp | 147 | 213 | (66) | -31% |
| Cerner | 130 | 96 | 34 | 35% |
| Linear Technology | 129 | 171 | (42) | -25% |
| Teradata | 126 | 90 | 36 | 40% |
| Nvidia | 125 | 129 | (4) | -3% |
| Verisk Analytics | 123 | 110 | 13 | 12% |
| Jabil Circuit | 122 | 103 | 19 | 18% |
| Altera | 118 | 245 | (127) | -52% |
| Amdocs | 115 | 107 | 8 | 7% |
| Maxim Integrated Products | 112 | 162 | (50) | -31% |
| F5 Networks | 106 | 85 | 21 | 25% |
| Tech Data | 105 | 109 | (4) | -4% |
| BMC Software | 102 | 144 | (42) | -29% |
| Garmin Ltd | 100 | 97 | 3 | 3% |
| Microchip Technology | 92 | 120 | (28) | -23% |
| Amazon.com | 84 | 307 | (223) | -73% |
| Lexmark | 82 | 106 | (24) | -23% |
| Marvell Technology | 75 | 226 | (151) | -67% |
| Lam Research | 55 | 199 | (144) | -72% |
| Novellus Systems | 51 | 113 | (62) | -55% |
| Vishay Intertechnology | 47 | 118 | (71) | -60% |
| Groupon | 31 | (117) | 148 | 126% |
| Juniper Networks | 23 | 171 | (148) | -87% |
| Total all 35 | 4,225 | 5,919 | (1,694) | -29% |
