These 19 Largest Arizona Corps generated Total Pretax Earnings which were up a very robust 68% over such amount two years ago in 2009.
Now I wanted to see if these superb earnings also applied to smaller Arizona Corps, which file with the SEC.
Thus, I found 13 Arizona headquartered Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of $20 mil or more in any of the most recent three years, and which weren't included in the 19 Largest Arizona Corps. Thus, these 19 Smaller Arizona Corps also did not have Pretax Income or Pretax Loss of more than $100 mil in any of the most recent three years. I used a lower $20 mil Pretax Income and Pretax Loss threshold in order to make sure the number of companies here are of sufficient size to be able to reach a valid conclusion.
These 13 Smaller Arizona Corps generated total earnings growth in the most recent two years of an off-the-charts 244%, 3.6 times the 68% total earnings growth of the 19 Largest Arizona Corps.
Clearly, Arizona citizens should be very proud of their outstanding Arizona companies.
And yeah, the Obama Administration created a very robust US economic environment, which permitted Arizona companies of all sizes to do just fantastically on the earnings front in the most recent two years.
But a second story here is the earnings results by year.
The 19 Largest Arizona Corps generated Pretax Income growth of only 4% in 2011 over 2010, and of a substantially higher 61% in 2010 over 2009.
The 13 Smaller Arizona Corps generated Pretax Income growth of 16% in 2011 over 2010, and of an incredibly off-the-charts 197% in 2010 over 2009.
So why is it that these Arizona Corps did so much better in 2010 than they did in 2011? I think you need to look at the political situation.
In both years, the President was the same.....a Moderate Democrat.
However, the US House was under Very Conservative Republican control in 2011, but under Democratic control in 2010.
Also, the US Senate had a lower Democratic majority in 2011 than it did in 2010.
And the State Governors and State Legislatures, all across the country, were clearly more Very Conservative Republican in 2011 than they were in 2010.
So clearly, there was a substantial shift nationally from Moderate Democratic control in 2010 to Very Conservative Republican control in 2011.
How could this change in political control make such a huge difference in Arizona company earnings?
It is pretty clear to me that in 2010, a Moderate Democratic President, coupled most importantly with a US House in Democratic hands, but also having a US Senate in Democratic hands, and further with having more State Governors and State Legislatures in Moderate Democratic hands, did wonders for corporate earnings growth in 2010. With this political structure, economic stimulus, both much needed business income tax stimulus and wise, carefully-vetted investment spending, can occur on a robust scale. And this very strong economic stimulus was in full throttle starting in the 4Q 2009, and did Corporations ever reap the benefit of this by generating exceptionally strong profits.
The worse thing that can happen after a financial meltdown, and near depression, is a US government that just waits for the free markets to correct themselves.....a laissez-faire approach, so favored by so many Republicans. Fortunately for the country, the exact opposite to that wisely happened in 2009 and 2010.
But then in 2011 and the first half of 2012, the US government was unfortunately forced into a laissez-faire economic approach, due to an uncompromising Very Conservative US Congress stopping nearly every economic initiative of the Obama Administration. The focus of the US Congress was almost singularly on austerity, when the improving, but still clearly struggling, US economy was shouting out for more economic stimulus, wisely designed.
Thus, things stopped to a walk on the US economic front when the US House switched to Very Conservative Republican control with the 2010 election, coupled with the US Senate Democratic majority rule being significantly reduced, and with many US States switching from Moderate Democratic Control to Very Conservative Republican Control.
Case in point is Business Income Tax Reform, which the Obama Administration strongly supports, and which nearly all Republicans say they are behind. If the President's Framework for Business Income Tax Reform, presented more than three months ago, is strengthened by the US Congress and passed, I am pretty certain that all of the US economic problems, including US real GDP growth, US unemployment, US underemployment, and the US Deficit....would all be substantially improved, and on an ongoing sustainable basis over the long run.
However, the US House Ways and Means Committee must initiate the legislation on this critically needed Business Income Tax Reform. And what have they done so far? Absolutely nothing. I'm not kidding. On the other hand, if the US House was under Democratic control, I am pretty certain that this Business Income Tax Reform would have gotten out of the US House Ways and Means Committee by now and been placed on the US House Floor.
Instead, the Very Conservative Republicans in the US House are focused on attempting to pass an extension of the much lower Bush income tax rates on the wealthy, which increases the US Deficit by more than a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the Very Conservative Republicans in the US House shows that they are clearly unfit to be reelected, due to either their gross incompetence on US economic issues, or to their only be interested in governing for the top 1% of the country.
On the other hand, when the President is a Moderate Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.
While substantial US job creation doesn't necessarily result from substantially higher corporate earnings, I can clearly tell you one thing.....lower corporate earnings will undoubtedly result in a significant loss of US jobs. When corporate earnings absolutely tanked in late 2008 and in 2009, corporations were very quick to dramatically cut US full-time employees. And to give a recent illustration, when Hewlett Packard recently announced down earnings, it also announced it will be cutting 27,000 jobs, or 8% of its workforce. And I have seen so many large Restructuring Charges made by Corporations in their 1Q 2012 Earnings Statements, made in the same quarter where their earnings growth has fallen off the cliff.
In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairments, and Gains and Losses on both Debt Retirements and Asset Dispositions.
I use Pretax Income rather than After-tax Net Income, since so much of the change in effective income tax rates just happens due to financial engineering.
I excluded Corps in the Development Stage, and ones generating losses for many years.
Clearly, with Arizona Corps massive earnings growth deceleration, which is identical to the situation in all US States all over the country, the US economy desperately needs an economic jolt.
I do think US companies, the US economy, and US job creation would all be helped immensely if the recalcitrant, uncompromising, Very Conservative Republican part of the US Congress would start working with the Obama Administration on much needed, bold, targeted like a laser, quick-hitting, highly effective, short-term economic stimulus, which is also wisely designed to get the maximum bang for the buck.
I think the key to bringing down dramatically and quickly the US unemployment and US underemployment rates, and which is sustainable in the long run, is for the US Government to give extremely explosive tax incentives to all US businesses, but to let these businesses earn them only if they also add, and retain for reasonable number of years, a sufficient number of US full-time jobs. As we unfortunately found out in the most recent two years, US businesses were quick to take the economic benefit of the lucrative tax incentives, but selfishly did very little in sharing these benefits with those trying to get to the US middle class by refusing to add much in the way of US full-time jobs. That's not playing fair. And it's also ineffective legislation, which instead should be carefully crafted for the entire country to benefit from, not just the US business community.
And it's also clear that the US Government should not continue to rely on the anticipated US economic effects of proposed legislation provided by extremely bright, well-intentioned, abstract-thinking, academic economists with no real-world business experience. Relying on their assessments have cost the country dearly.
And especially for Arizona's sake, a piece of this economic stimulus must be the ability for as many home owners as possible, including those underwater, to be able to quickly refinance their mortgages to the prevailing lower interest rates, and at little cost to refinance.
Let me first show each of the 19 Largest Arizona Corps and where they are Headquartered.
| Arizona Largest Corps | Arizona HQs |
| Amkor Technology | Chandler |
| Apollo Group | Phoenix |
| Avnet | Phoenix |
| First Solar | Tempe |
| Freeport McMoran | Phoenix |
| IMH Financial Group | Scottsdale |
| Insight Enterprises | Tempe |
| Knight Transport | Phoenix |
| Medicis Pharmaceutical | Scottsdale |
| Meritage Home | Scottsdale |
| Microchip Technology | Chandler |
| ON Semiconductor | Phoenix |
| Petsmart | Phoenix |
| Republic Services | Phoenix |
| RSC Holdings | Scottsdale |
| Southern Copper | Phoenix |
| Swift Transport | Phoenix |
| US Airways | Tempe |
| Western Alliance Bancorp | Phoenix |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 19 Largest Arizona Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| US House | US House | |||||
| Republican | Democratic | Obama | ||||
| Control | Control | Bump | ||||
| PTI(L) | PTI(L) | Two Year | ||||
| % | % | % | ||||
| Change | Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | 2011 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | 2009 | |
| mils $s | mils $s | mils $s | ||||
| Arizona Largest Corps | ||||||
| Freeport McMoran | 8,818 | 8,512 | 5,816 | 4% | 46% | 52% |
| Southern Copper | 3,449 | 2,431 | 1,404 | 42% | 73% | 146% |
| Apollo Group | 1,174 | 1,364 | 1,148 | -14% | 19% | 2% |
| Republic Services | 1,117 | 1,038 | 865 | 8% | 20% | 29% |
| Avnet | 871 | 585 | 316 | 49% | 85% | 176% |
| Petsmart | 446 | 370 | 309 | 21% | 20% | 44% |
| Microchip Technology | 380 | 461 | 238 | -18% | 94% | 60% |
| First Solar | 339 | 762 | 686 | -56% | 11% | -51% |
| Medicis Pharmaceuticals | 200 | 249 | 166 | -20% | 50% | 20% |
| Swift Transport | 149 | (74) | (109) | 301% | 32% | 237% |
| Insight Enterprises | 142 | 115 | 42 | 23% | 174% | 238% |
| ON Semiconductor | 124 | 306 | 71 | -59% | 331% | 75% |
| Amkor Technology | 116 | 251 | 112 | -54% | 124% | 4% |
| Knight Transport | 101 | 98 | 84 | 3% | 17% | 20% |
| US Airways | 90 | 502 | (243) | -82% | 307% | 137% |
| Western Alliance Bancorp | 50 | 11 | (135) | 355% | 108% | 137% |
| RSC Holdings | (14) | (117) | (111) | 88% | -5% | 87% |
| Meritage Home | (20) | 2 | (155) | -1100% | 101% | 87% |
| IMH Financial Corp | (35) | (117) | (74) | 70% | -58% | 53% |
| Total all 19 | 17,497 | 16,749 | 10,430 | 4% | 61% | 68% |
Now let me show each of the 13 Smaller Arizona Corps and where they are Headquartered.
| Arizona Smaller Corps | Arizona HQs |
| Amtech Systems | Tempe |
| Cole Credit Property Trust II | Phoenix |
| Cole Credit Property Trust III | Phoenix |
| Drivetime Automotive Group | Phoenix |
| Ecotality | Tempe |
| Grand Canyon Education | Phoenix |
| HealthCare Trust of America | Scottsdale |
| Isola Group | Chandler |
| Limelight Networks | Tempe |
| Mobile Mini | Tempe |
| P F Chang China Bistro | Scottsdale |
| Providence Service Corp | Tucson |
| Universal Technical Institute | Scottsdale |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 13 Smaller Arizona Corporations for each of the most recent three years, along with the related percentage changes in earnings.
| US House | US House | |||||
| Republican | Democratic | Obama | ||||
| Control | Control | Bump | ||||
| PTI(L) | PTI(L) | Two Year | ||||
| % | % | % | ||||
| Change | Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | 2011 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | 2009 | |
| mils $s | mils $s | mils $s | ||||
| Arizona Smaller Corps | ||||||
| Drivetime Automotive Group | 89 | 74 | 23 | 20% | 222% | 287% |
| Grand Canyon Education | 82 | 66 | 50 | 24% | 32% | 64% |
| P F Chang China Bistro | 51 | 64 | 64 | -20% | 0% | -20% |
| Mobile Mini | 49 | 34 | 46 | 44% | -26% | 7% |
| Universal Technical Institute | 46 | 47 | 19 | -2% | 147% | 142% |
| Cole Credit Property Trust III | 44 | (7) | (8) | 729% | 13% | 650% |
| Amtech Systems | 38 | 16 | (2) | 138% | 900% | 2000% |
| Cole Credit Property Trust II | 32 | 33 | 34 | -3% | -3% | -6% |
| Providence Service Corp | 27 | 41 | 33 | -34% | 24% | -18% |
| HealthCare Trust of America | 6 | (1) | (21) | 700% | 95% | 129% |
| Isola Group | (21) | 7 | (65) | -400% | 111% | 68% |
| Ecotality | (22) | (16) | (30) | -38% | 47% | 27% |
| Limelight Networks | (32) | (22) | (30) | -45% | 27% | -7% |
| Total all 13 | 389 | 336 | 113 | 16% | 197% | 244% |
