US Smaller Technology Corps Crushed Again in the 2Q 2012 By US Congressional Republicans

I found 54 US Technology Corps, which file with the SEC, which have already reported their calendar June 2012 quarter earnings, and with Pretax Income or Loss of more than $100 mil in any of the following quarters: 2Q 2012, 1Q 2012, 2Q 2011, or 1Q 2011.

These 54 US Technology Corps generated Total Pretax Income in the 2Q 2012 of $55.2 bil, an increase of 6% from the 2Q 2011.  This was a significant deceleration from the 1Q 2012 earnings growth over the 1Q 2011 of 15%.

But you need to break down the earnings of these companies to get to the salient story.

Apple dominates these US Technology companies.  Here’s the Pretax Income growth of Apple for the most recent six quarters over the prior year’s quarter:

1Q 2011……+96%

2Q 2011…..+123%

3Q 2011…....+61%

4Q 2011….…119%

1Q 2012……+97%

2Q 2012……+24%

Apple is truly a great company with great products.  However, it is mathematically impossible to continue growing its earnings like it did in the above shown five quarters from 1Q 2011 to 1Q 2012.  When the earnings numbers become so incredibly high, the earnings growth has to come down.  We saw this in company after company when the Tech Bubble burst in 2000.

So yeah, Apple was a major contributor to the 2Q 2012 earnings growth deceleration of these 54 Technology companies.

Two Technology companies.....Seagate Technology and Western Digital.....,with more than half of their sales in the Asia Pacific Region, had their supply disrupted in the 2Q 2011 by the Japanese Earthquake and Tsunami.  Thus their blowout earnings growth in the 2Q 2012 over the 2Q 2011 totaling a massive 507% is a bit inflated.

You are now left with 51 of these 54 Technology companies.  

When you drill down more, you have 11 of them with Pretax Income above $1 bil in either the 2Q 2012 or the 2Q 2011, and you have the remaining 40 of them with Pretax Income under $1 bil.

These larger 11 Tech companies had their Total Pretax Income in the 2Q 2012 grow by 3% over the 2Q 2011, a shade above the 2% total earnings growth in the 1Q 2012 over the 1Q 2011.

But these 40 Smaller Tech companies had their Total Pretax Income in the 2Q 2012 decline by 18% from the 2Q 2011.  And 24 of these 40 Smaller Tech companies, or 60% of them, had earnings declines in the 2Q 2012 from the prior year’s quarters.

So, how did these same 40 Smaller Tech companies do in the 1Q 2012?  Well, a bit worse, with their Total Pretax Income declining by 23% from the 1Q 2011.

So what is causing this massive earnings growth deceleration in the past six quarters?  After all, when you go back to a 3Q 2011 posting I made, the 60 largest US Technology companies other than Apple, had the following massive total earnings growth deceleration over the prior year’s period:

Annual 2010 over Annual 2009…..+49%

1Q 2011 over 1Q 2010………..…....…+17%

2Q 2011 over 2Q 2010……….....……..+9%

3Q 2011 over 3Q 2010………….....…..+6%

And then you see the above 51 US Tech companies (all other than Apple, Seagate Technology and Western Digital) had the following total earnings declines over the prior year’s quarter in the most recent three quarters:

4Q 2011 vs 4Q 2010……………down 2%

1Q 2012 vs 1Q 2011……….……down 5%

2Q 2012 vs 2Q 2011……………down 2%

Well, certainly a very weak European economy, coupled with the weak Euro resulting in these profits getting translated into a stronger US dollar, is causing havoc on the earnings of US Technology companies which have a significant presence in Europe.

But there is a much more significant explanation for this earnings deterioration in 2011 and the first half of 2012.  

I think this massive earnings deterioration in 2011 and the first half of 2012 is due predominately to the switch from Moderate Democratic control to an Ultra Conservative Republican control, particularly in the US House.

The US economy stopped to a walk by the US House Republicans stopping, and the US Senate Republicans filibustering, nearly every Obama Administration economic initiative.  And the House Republicans abandoning the Grand Bargain Talks with the Obama Administration, the subsequent US Debt downgrade, and the unsuccessful Super Committee, all clearly showed that the US Congress could not get anything of substance done, and this severely harmed the US economy.

And the killing of the 100% first-year tax depreciation on equipment purchases in 2012 had a very harmful impact on US Technology and US Manufacturing companies.

The US economy is shouting out for bold, targeted, quick-hitting fiscal measures like the 100% first-year tax depreciation on equipment and computer software, highly accelerated first-year tax depreciation on buildings and building remodelings, and even lucrative investment tax credits on equipment, building, and computer software investments.  And it only makes sense to put in some measures which allow these very lucrative business tax incentives only if these companies increase their US payroll counts, which must be retained for a reasonable number of years or the tax benefits are recaptured.

And the first-year tax depreciation measures would be particularly explosive in the remainder of 2012 when combined with President Obama’s Business Tax Reform, which reduces business income tax rates starting in the following year.

But most US Congressional Republicans, in a Mean-Spirited Party over Suffering People Strategy, are stubbornly determined to keep the US economy from improving and US job creation from occurring at least until after the upcoming November 2012 election.  They are fervently praying for an increase in the US Unemployment Rate in July, August, September and October 2012.  They think that will cause voters to remove President Obama from office.

But you know what?  If Mitt Romney is elected President, and if the US Senate and the US House are both in Republican control, I am pretty certain you will see the US Unemployment Rate continue to rise, and average in the low double digit percentages for the last three years of Romney’s Presidential term.

Why?  Because even though the US economy is substantially better than it was at the end of 2008, it is still very fragile.  And Romney’s main economic plan is to simply reduce the income tax rate sharply on both Corporations and the wealthy, and to let that trickle down to US job creation.

How incredibly naïve!  US businesses have consistently shown that when they get a no-strings-attached reduction in the tax rate, they hire no one.  Thus, the US Deficit will balloon further, US unemployment will continually rise, US underemployed will rise, the middle class will shrink further, and the poor will be crushed.  And the gap between the very rich and everyone else will be substantially expanded further.

The only good thing about the above scenario is that with these disastrous economic effects occurring in the next four years, US citizens will be shouting out for Obama’s return to office in 2016.....and the election would be a landslide.

======================

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 Long-term 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.

Below here is the Pretax Income (PTI) or Pretax Loss of each of these 54 US Technology companies for the 2Q 2012 and the 2Q 2011.

			Increase	Increase
	PTI	PTI	(Decrease)	(Decrease)
	2Q 2012	2Q 2011	Amount	%
	mils $s	mils $s	mils $s
Technology Corps
Apple	11,861	9,551	2,310	24%
Supply Disruptions Caused by Japan Equake and Tsunami in 2011
Seagate Technology	1,013	129	884	685%
Western Digital	801	170	631	371%
Total of Both	1,814	299	1,515	507%
PTI > $1 Bil
Microsoft	6,552	6,319	233	4%
IBM	5,161	4,885	276	6%
Oracle	4,382	4,170	212	5%
Intel	3,934	3,931	3	0%
Google	3,639	3,085	554	18%
Cisco Systems	2,779	2,203	576	26%
Hewlett Packard	1,979	2,892	(913)	-32%
Qualcomm	1,581	1,274	307	24%
Intuit	1,104	1,052	52	5%
Accenture	1,066	958	108	11%
Dell	792	1,170	(378)	-32%
Total all 11	32,969	31,939	1,030	3%
PTI < $1 Bil
EMC	904	764	140	18%
Ebay	733	604	129	21%
Texas Instruments	576	909	(333)	-37%
Applied Materials	387	686	(299)	-44%
CA	370	333	37	11%
Xerox	351	434	(83)	-19%
Facebook	336	399	(63)	-16%
Thermo Fisher Scientific	318	255	63	25%
KLA Tencor	306	334	(28)	-8%
Adobe Systems	295	259	36	14%
Agilent Technologies	293	260	33	13%
Motorola Solutions	240	190	50	26%
Symantec	237	257	(20)	-8%
NetApp	215	208	7	3%
VMware	214	190	24	13%
Analog Devices	211	297	(86)	-29%
Paychex	198	184	14	8%
Check Point Software	190	161	29	18%
SAIC	183	207	(24)	-12%
Broadcom	163	250	(87)	-35%
Roper Industries	163	155	8	5%
Altera	159	238	(79)	-33%
Maxim Integrated Products	158	184	(26)	-14%
Xilinx	155	180	(25)	-14%
Flextronics	149	153	(4)	-3%
Amazon.com	146	225	(79)	-35%
Linear Technology	141	175	(34)	-19%
Cerner	139	111	28	25%
Jabil Circuit	129	127	2	2%
F5 Networks	112	90	22	24%
Marvell Technology	95	148	(53)	-36%
Juniper Networks	89	157	(68)	-43%
Citrix Systems	86	101	(15)	-15%
Nvidia	77	156	(79)	-51%
Tech Data	76	66	10	15%
Yahoo	75	185	(110)	-59%
Lam Research	63	137	(74)	-54%
Lexmark	52	131	(79)	-60%
Sandisk	19	365	(346)	-95%
Micron Technology	(222)	164	(386)	-235%
Total all 40	8,581	10,429	(1,848)	-18%
Grand Total all 54	55,225	52,218	3,007	6%

US Big Retail Corps 2Q 2012 Earnings Up 6% vs Up Only 1% in 1Q 2012...But...

I found 35 US Retail Corps, which file with the SEC, which have already reported their calendar 2Q 2012 earnings, and which generated Pretax Income or Pretax Loss of more than $200 mil in any of these 4 quarters: 2Q 2012, 1Q 2012, 2Q 2011 and 1Q 2011.

The one large Retail Corp excluded is Publix Super Markets, which hasn't released its 2Q 2012 earnings yet.


These 35 US Retail Corps had Total Pretax Income in the 2Q 2012 of $19,193 mil, up $1,039 mil, or up 6%, from the 2Q 2011, which is pretty impressive in these pretty tough economic times in the US, and extremely tough economic times in Europe.

But you need to break down these Corps to get a better handle on what is happening in Retailing.

In the 2Q 2012, the Total Pretax Income increase of these 35 US Big Retailers was $1,039 mil over the 2Q 2011.  And in the 1Q 2012, this increase was only $205 mil.  Thus, the improvement in the 2Q 2012 over the 1Q 2011 is the difference, or $834 mil.

Amazingly, $785 mil of this improvement, or a massive 94%, is due to one Retailer...Sears Holding...which went from a 1Q 2012 Pretax Income decline of $674 mil to a 2Q 2012 earnings improvement of $111 mil.  Its April 2012 quarter sales comparable declines were much less pronounced than those experienced in the January 2012 quarter. 

Walmart dominates these 35 US Big Retailers, comprising over 30% of 2Q 2012 Total Pretax Income of all 35.  Walmart had a very strong 2Q 2012, with Pretax Earnings growth of 9% over the prior year's quarter, and an acceleration from the 5% Pretax Earnings growth in the 1Q 2012 over the 1Q 2011. 

So, what happened with the Remaining 33 US Big Retailers?  Well, their Total Pretax Income growth of 3% in the 1Q 2012 over the 1Q 2011 remained  precisely constant in the 2Q 2012 over the 2Q 2011.

Extreme weakness in the European economy, coupled with a weaker Euro, hindered the US Big Retailers with a large presence there like McDonalds. 

And JC Penney and Best Buy both had down quarters.

The stick-out winners of these Remaining 33 Retailers were the ones in Home Improvement.....Home Depot, Sherwin Williams, and Lowes...and also TJX, Dollar General, Macy's, Ross Stores, Starbucks and Costco.


It should also be pointed out that the 2Q 2012 Earnings Per Share growth of these 35 Big US Retailers is a bit higher than this 6% Total Pretax Earnings growth.  This is due to many of these large US Retailers having substantial stock buyback programs.

For instance, the GAP had a 2% Pretax Earnings decline in the 2Q 2012, which was a substantial improvement from its 41% earnings decline in the 1Q 2012.  The GAP's Pretax Earnings decline of 2% in the most recent quarter changes dramatically to an 18% increase on an Earnings Per Share basis.  No, I'm not kidding.  This is what the GAP's massive stock buyback program does.

Still, the US economy is in severe need of an upward jolt.  But no matter what they say publicly, it is clear that the Republicans in the US House and US Senate are determined to prevent any US economic lift until after the November 2012 election.....a clearly heartless, mean-spirited Party over suffering People strategy. 

And if the Republicans in the US House either vote down, or don't permit a vote on, the US Senate recently passed tax cuts for everyone, starting on January 1, 2013, on the first $250,000 of everyone's taxable income, US Retailers will be hurt markedly by the resultant high level of consumer uncertainty, particularly in the critically key Thanksgiving to Christmas sales period. 

Below is the Pretax Income and Pretax Loss of these 35 Big US Retailers for both the 2Q 2012 and the 2Q 2011.

			Increase	Increase
	PTI	PTI	(Decrease)	(Decrease)
	2Q 2012	2Q 2011	Amount	%
	mils $s	mils $s	mils $s
Walmart	5,852	5,378	474	9%
Sears Holding	(134)	(245)	111	45%
The Remaining 33
McDonalds	2,010	2,066	(56)	-3%
Home Depot	1,630	1,283	347	27%
Target	1,101	1,081	20	2%
Lowes	850	740	110	15%
TJX	681	499	182	36%
Kroger	673	673	0	0%
Costco	622	534	88	16%
Starbucks	492	410	82	20%
Yum Brands	435	384	51	13%
Autozone	388	353	35	10%
GAP	373	381	(8)	-2%
Dollar General	346	267	79	30%
Ross Stores	338	282	56	20%
Sherwin Williams	328	257	71	28%
Bed Bath & Beyond	312	290	22	8%
Macy's	279	214	65	30%
Staples	277	302	(25)	-8%
Nordstrom	240	241	(1)	0%
Kohls	239	315	(76)	-24%
Best Buy	235	449	(214)	-48%
OReilly Automotive	235	217	18	8%
Advance Auto Parts	215	176	39	22%
Limited Brands	213	213	0	0%
Darden Restaurants	201	186	15	8%
CarMax	196	203	(7)	-3%
Family Dollar Stores	194	178	16	9%
Dollar Tree	189	162	27	17%
Safeway	178	219	(41)	-19%
Amazon	146	225	(79)	-35%
Tiffany	124	126	(2)	-2%
GameStop	115	125	(10)	-8%
Toys R Us	(98)	(133)	35	26%
JC Penney	(282)	103	(385)	-374%
Total all 33 Remaining	13,475	13,021	454	3%
Total all 35	19,193	18,154	1,039	6%

Drop in Exxon Mobil Core Earnings Great For US and World Economies

Exxon Mobil just released its 2Q 2012 earnings.

It doesn't disclose a detailed income statement until it files its 10Q with the SEC a bit later.

So, all that can be determined at this point in time is that it reported 2Q 2012 After-tax Net Income of $15,910 mil.  However, that amount included huge Net Gains on Divestitures and Tax-Related Items, which totaled an increase in After-Tax Net Income of a massive $7.5 bil.  Thus exclusive of these two huge items, what I call Exxon Mobil's Core Net Income was $8.4 bil in the 2Q 2012, which was a 21% decline from the $10.68 bil of After-tax Net Income generated in the 2Q 2011. 

I like to focus on Core Pretax Income trends, because it excludes any changes in effective tax rate, which can be volatile, and are a function of financial engineering.

I'm not able to get a handle on Exxon Mobil's Core Pretax Income in the 2Q 2012, since it didn't break down the huge $7.5 bil huge pickup in earnings between how much was due to Pretax Income and how much was due to Income Tax Items.

But here is the quarterly trend in Exxon Mobil's Core Pretax Income from the start of 2011, shown as an increase or decrease over such Core Pretax Income in the prior year's quarter.

1Q 2011 vs 1Q 2010.....+57%
2Q 2011 vs 2Q 2010.....+46%
3Q 2011 vs 3Q 2010.....+45%
4Q 2011 vs 4Q 2010.....+11%
1Q 2012 vs 1Q 2011.....down 7%

And here is the quarterly trend in Exxon Mobil's Core After-tax Net Income from the start of 2011, shown as an increase or decrease over such After-tax Net Income in the prior year's quarter.

1Q 2011 vs 1Q 2010.....+66%
2Q 2011 vs 2Q 2010.....+41%
3Q 2011 vs 3Q 2010.....+41%
4Q 2011 vs 4Q 2010.......+2%
1Q 2012 vs 1Q 2011.....down 10%
2Q 2012 vs 2Q 2011.....down 21%


I think it's really good economic news to the improving, but still struggling, US economy, and also to the very struggling world economies, to see this marked downturn in Exxon Mobil's quarterly earnings, which is at least somewhat correlated with oil prices, and the resultant gas prices at the pump.

Certainly there are many factors here at play.  But I would like to point out two of them.

First, I think that President Obama's actions, under the radar screen, to soften the excessive amount of oil speculation has played a key role in moderating oil prices, and also resulted in much lower gas prices at the pump.

And second, I think that some consumers in the US, and around the globe, have decided to avoid, as best they can, the very powerful Exxon Mobil at the gas pump.  In the US, some citizens are just fed up with Exxon Mobil's dominance of the US Congress, and with the unwarranted massive annual tax subsidies bestowed on them by the US Congress, and thus took it in their own hands at the gas pump.

US Big National/Regional Banks 2Q 2012 Earnings Down 3%, With Much Noise

Other than the ones included in the Big 8 Financials, which I covered in an earlier post, I found 12 US National/Regional Banks, which file with the SEC, which have already reported their 2Q 2012 earnings, and which generated Pretax Income of more than $200 mil in either the 2Q 2012 or the 2Q 2011.

These 12 US Big National/Regional Banks had their Total Pretax Income in the 2Q 2012 decline by 3% from the 2Q 2011, which was a marked earnings reversal from the 10% earnings growth experienced by these same 12 Banks in the 1Q 2012 as compared with the 1Q 2011.

And there was a lot of noise in these 2Q 2012 earnings reports, as follows:

·                    Bank of New York Mellon reported a Special Pretax Litigation Charge in the 2Q 2012 of $350 mil, which I excluded in the Pretax Income numbers below.

·                    PNC Financial reported a Pretax Charge from Redemption of Preferred Securities in the 2Q 2012 of $130 mil, which I excluded in the Pretax Income numbers below.  PNC also reported Provisions for Residential Mortgage Loan Repurchase Obligations in the 2Q 2012 of $438 mil, which I included in the Pretax Income numbers below.

·                    BB&T benefited from much higher Mortgage Banking Income and Insurance Income in the 2Q 2012.

·                    Fifth Third Bancorp’s PTI numbers in both years exclude Gains from revaluing its Warrant in Vantiv.

·                    Regions Financial benefited from reporting a substantially lower Provision for Loan Losses…..$26 mil in the 2Q 2012 and $398 mil in the 2Q 2011.

·                     SunTrust Banks also benefited from reporting a lower Provision for Credit Losses…..$300 mil in the 2Q 2012 and $392 mil in the 2Q 2011.

·                    M&T Bank’s 2Q 2011’s Pretax Income amount below excludes a $65 mil Acquisition Gain.

But the most significant noise of all was Capital One Financial, whose 2Q 2012 earnings included a $1,200 mil earnings charge for a Loan Loss Allowance established as a result of its acquisition in 2012 of HSBC US’ credit cards.  I think there is something wrong with US Generally Accepted Accounting Principles, or the way they are being applied, if Capital One Financial, as well as other financial firms, are able to book this huge charge all at once, which is considered by many as a one-off, and then subsequently fine-tune down the resultant Reserve Allowance, thereby being able to increase their future earnings for many quarters…..a bit of an accounting flim-flam, I think.

I included this $1,200 mil charge in Capital One Financial’s Pretax Income below.

I excluded from Capital One Financial’s 2Q 2011 Pretax Income its Bargain Purchase Gain of $594 mil.

I don't think it is good for the US economy for the two largest traditional banks to have their earnings growth in the 2Q 2012.....Wells Fargo at 17% and US Bancorp at 19%.....which is so much better than the 3% total earnings decline of these 12 much smaller banks.

Below here is the Pretax Income (PTI) of these 12 US Big National/Regional Banks for the 2Q 2012 and the 2Q 2011.

			Increase	Increase
	PTI	PTI	(Decrease)	(Decrease)
	2Q 2012	2Q 2011	Amount	%
	mils $s	mils $s	mils $s
US National/Regional Banks
Bank NY Mellon	939	1,034	(95)	-9%
PNC Financial	849	1,146	(297)	-26%
BB&T	729	418	311	74%
State Street Corp	652	715	(63)	-9%
Fifth Third Bancorp	509	477	32	7%
Regions Financial	477	45	432	960%
SunTrust Banks	368	237	131	55%
M&T Bank	352	383	(31)	-8%
Key Corp	288	346	(58)	-17%
Northern Trust	266	230	36	16%
Capital One Financial	236	801	(565)	-71%
Huntington Bancshares	202	195	7	4%
Total all 12	5,867	6,027	(160)	-3%

Big Eight US Financial Corps 2Q 2012 Earnings Down 11%

When I think of the US Big Financial Corps, eight of them come top of mind.

In the 2Q 2012, the Total Pretax Income of these 8 US Big Financial Corps was down 11% from the 2Q 2011, after being down 9% in the 1Q 2012 from the 1Q 2011.

The traditional banks.....Wells Fargo and US Bancorp.....did just fine.  So did the Financial Sector of GE, which reports separately with the SEC.

But all of the others, where principal trading is a significant chunk of their business, had down earnings from the prior year's quarter.

JPMorgan Chase reported 2Q 2012 Pretax Earnings which were down $1,127 mil from the 2Q 2011.  It identified $5,060 mil of Pretax Trading Losses made by its CIO's sector in its synthetic credit portfolio.  It was able to soften the blow to its 2Q 2012 earnings by pushing back $640 mil of these trading losses to its already reported 1Q 2012 earnings.  Thus, the Pretax trading losses reducing its 2Q 2012 earnings was $4.4 bil.

Derivatives are a zero-sum game.  I'd be very interested in finding out which companies were on the other side of these massive $5,060 mil of JPMorgan Chase's derivative losses.

It's pretty clear to me that all derivatives, which are clearly deemed speculative in nature, should be disallowed in the US.  If this would have been the case, there would not have been the horrible financial meltdown in the US in 2008, which continues to play havoc on US Unemployment, US Underemployment, US economic growth, and the massive US Deficit.  The US Financial Accounting Standards Board has already done an excellent job at defining effective hedge derivatives and speculative derivatives.  There is clearly nothing wrong with derivatives that are effective hedges.


The only part of the US Government which is effectively working to clean up the horrible economic mess caused by the financial industry is the Obama Administration.

The Republicans in the US House and in the US Senate just repeatedly attack the Obama Administration, with so many naive and inaccurate assertions, on this issue.  With their lack of financial expertise, they have nothing in the way of wise recommendations to help, thus they elect to take the low road with continuing bombastic, sarcastic, irrelevant attacks.

US citizens want results from the US Congress, not just attacks.  And US citizens are flat out sick and tired of the repeated unprofessional, unreasonable, irrational, bombastic attacks on US Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke in televised US House and US Senate Financial Hearings by nearly all of the US House Republicans and also by some US Senate Republicans.

This is one of the many reasons the US Congress has such low approval ratings.  The US economy will not be great again, unless there is a major reconfiguration in the US Congress in the upcoming November 2012 election.  The Obama Administration cannot do it alone.  It needs help from the US Congress. 

And it is also the reason the US Congress, which is so devoid of members with savvy financial expertise, needs new members like Massachusetts' US Senate Candidate Elizabeth Warren, whose very strong financial expertise would put her at the very top of the present US Congress.


With these massive $5,060 mil of trading losses, JPMorgan Chase would have to find ways to soften the impact of this on its 2Q 2012 earnings.  And did they ever.

First, as stated earlier, it shoved $660 mil of these trading losses to its 1Q 2012 earnings, by restating these earlier reported earnings.

And second, just like many other companies, it focused on areas where the measurements are very subjective.....specifically, its Estimated Reserves.

In JPMorgan Chase's case, there are three huge subjective Reserve areas.....Credit Losses, Litigation and Income Tax.

JPMorgan Chase decided to reduce its Provision for Credit Losses from the $1,810 mil included in its 2Q 2011 earnings down to only the $214 included mil in its 2Q 2012 earnings.....a massive reduction of $1,596 mil.

JPMorgan Chase also decided to reduce its Litigation Expenses from the $1,900 mil included in its 2Q 2011 earnings down to only $300 mil included in its 2Q 2012 earnings.....a massive reduction of another $1,600 mil.

Yeah, when you combine these two expense reductions, it yields $3,196 mil.  And then when you also include the $660 mil of trading losses moved to the 1Q 2012, this yields a total of $3,856 mil.  Yeah, that's a magical $3,856 mil income recovery of the total $5,060 mil of Pretax Trading Losses.


And to top it off, JP Morgan Chase elected to reduce its effective income tax rate, the rate reflected in its Total Income Tax Expense included in its earnings, from 33.2% in the 2Q 2011 to 29.1% in the 2Q 2012.  JPMorgan Chase has a massive $8.9 bil of Income Tax Reserve on its books, higher than any other US company.  This Income Tax Reserve is the Estimated Tax Liability to cover all of its income tax audits.  With such a huge subjective number covering so many income tax issues, it is easy to fine tune this computation each quarter.   


OK, enough on JPMorgan Chase.  Let me move to Bank of America.

When Bank of America reported its 2Q 2011 disastrous earnings report, it showed a Pretax Loss of $12.6 bil.  Yeah, that's not a misprint, it's $12.6 bil in only one quarter.

And in its 2Q 2011 earnings release, it detailed more than $18.2 bil of adjustments, which turned this Generally Accepted Accounting Principles (GAAP) Pretax Loss of $12.6 bil into a Non-GAAP Pretax Profit of $5.6 bil.

The main items included in this long list of $18.2 bil of Non-GAAP adjustments were $14.0 bil of Provisions for Mortgage-related Representations and Warranties.  This $14.0 bil of Provisions was comprised of $8.6 bil related to the resolution of nearly all of the legacy Countrywide-issued first-lien, non-GSE Residential Mortgage-backed Securization (RMBS) Repurchase Exposures, as well as $5.4 bil related to other non-GSE and GSE exposures.

So when Bank of America released its 2Q 2012 earnings report, it reported a Pretax Income of $3,147 mil in the 2Q 2012 and a Pretax Loss of $12,875 mil in the 2Q 2011.

Bank of America did not include that same key $18.2 bil of detailed adjustments, nor its Non-GAAP Pretax Income for the 2Q 2011 in its 2Q 2012 earnings release.  It did mention some of its main items in this list in its 2Q 2012 earnings release.  Seems very strange to me.....not really being fully transparent on something so key to evaluating the company's earnings.

In my Pretax Income numbers below, I reflected Bank of America's $18.2 bil of Non-GAAP income adjustments in deriving my 2Q 2011 Core Pretax Income number.


Below here is the Pretax Income (PTI) of each of these 8 US Big Financial Corps for the 2Q 2012, and as compared with the 2Q 2011.

			Increase	Increase
	PTI	PTI	(Decrease)	(Decrease)
	2Q 2012	2Q 2011	Amount	%
	mils $s	mils $s	mils $s
US Big 8 Financial
Wells Fargo	7,092	6,073	1,019	17%
JPMorgan Chase	7,000	8,127	(1,127)	-14%
Citigroup	3,702	4,299	(597)	-14%
Bank of America	3,147	5,325	(2,178)	-41%
GE Capital Services	2,238	1,981	257	13%
US Bancorp	1,942	1,637	305	19%
Goldman Sachs	1,415	1,612	(197)	-12%
Morgan Stanley	940	1,970	(1,030)	-52%
Total all 8	27,476	31,024	(3,548)	-11%

California Largest Corp 2011 Annual Earnings Up 85% Since 2009 Under Obama: An Update

From an extensive, very time-consuming review, I found a very large number.....202.....of California Corporations, which file with the SEC, which had Pretax Income or Pretax Loss of at least $100 mil in any of the most recent three fiscal years.

And in an earlier very recent post, I found a very large number.....130.....of Smaller California Corporations, which file with the SEC, which had Pretax Income or Pretax Loss of at least $40 mil in any of the most recent three fiscal years, and which also didn't generate Pretax Income or Pretax Loss of $100 mil or more in any of the most recent three years. 

Clearly, California rules the country in the number of both Largest and Smaller Corps.

These 202 Largest California Corps generated Total Pretax Income of $275 bil in their most recent 2011 fiscal year ends, which was a very robust 85% higher than such earnings achieved two years ago in their 2009 fiscal years ends.

And the 130 Smaller California Corps generated Total Pretax Income of $2.4 bil in their most recent 2011 fiscal year ends, which was a massively off-the-charts 1,431% higher than such earnings achieved two years ago in their 2009 fiscal years ends.

Clearly, California citizens should be very proud of their many superb California companies, of all sizes.

And yeah, the Obama Administration created a very robust US economic environment, which permitted these fine California companies to do just fantastically on the earnings front in the most recent two years.  I find it incredible that nearly half of the country, including many California citizens, believe that the Obama Administration has just been horrible to US businesses of all sizes.  The above earnings growth numbers show just how out of touch to reality these people are.

Also, the many US House members from California, and particularly Nancy Pelosi, as well as California's very fine two US Senators.....Barbara Boxer and Dianne Feinstein.....played key roles in supporting their superb California companies, of all sizes, which helped them to generate these incredible earnings growth percentages in the most recent two years.

But there is another key story here.  To get to it, you need to break down the earnings growth by year and by sector.

And when you do that, there is just an incredible story.

These 202 Largest California Corps had their Total Pretax Income increase by 23% in 2011 over 2010, when John Boehner was US House Speaker, and the Republicans controlled the US House.  But in 2010, when Nancy Pelosi was US House Speaker and the Democrats were in control of the US House, the total earnings growth of these 202 Largest California Corps was more than double this 23% earnings growth, or up a very robust 50% over 2009.  Also, in the first half of 2012, with the Republicans in the control of the US House, this total earnings growth stopped to a walk.

And a clearly eye-opening finding is how California's Largest Technology companies performed on the earnings front.

To show how key the Technology sector is to the State of California, the Total Pretax Income of the 86 Technology companies comprised nearly half, or 49%, of the Total Pretax Income of all of the 202 Largest California Corps.  And the total earnings of these 86 Largest California Technology companies more than doubled in 2011 over that of two years earlier in 2009.  Whoa!  But then that was much lower than the 147% total earnings growth in the same two years of California's 2 Big Oil Corps: Chevron and Occidental Petroleum.

These 86 California Largest Technology companies, included in these 202 Largest California Corps, generated Total Pretax Income of $135 bil in 2011, or an increase of 22% over 2010, when the Republicans were in control of the US House.  So what happened in 2010, when the US House was under Democratic Control?  Well, believe it or not, the Total Pretax Income of these 86 California Largest Technology companies increased by a massive 66% over 2009, or by three times the 22% earnings growth when the Republicans were in control of the US House in 2011. And in the first half of 2012, with the Republicans in control of the US House, the total earnings growth of these California Largest Technology companies declined even further, and did so markedly.

And when you back out Apple, the other 85 Largest California Technology companies had their Total Pretax Income growth decelerate much more sharply from a 69% earnings growth in 2010 over 2009, under Democratic control of the US House, to only 10% in 2011 over 2010, under Republican control of the US House.  And the Total Pretax Income of these 85 Largest California Technology companies was flat in the first half of 2012, as compared with the first half of 2011.


California's Largest Technology CEO's, all of their employees, and their stockholders have to be very disappointed with US Government action, or the lack thereof, in both 2011, and the first half of 2012, when the US House was under Republican control.  It would be clearly in all of their best economic interests if the US House turned to Democratic control, because Technology companies of all sizes will flourish from their present very tepid earnings growth, or even the lack thereof.

But it wasn't just California's Technology Corps which have experienced a massive earnings deterioration under Republican control of the US House. 

The 32 Largest Health Care Corps, included in the 202 Largest California Corps, generated Total Pretax Income growth of 23% in 2010 over 2009, when the US House was under Democrat control.  And what happened in 2011, when the US House switched to Republican control?  Well, the Total Pretax Income of these 32 Largest Health Care Corps actually declined by 2%.  Whew!

Likewise with the 11 Largest California Retail companies, whose total earnings growth in 2010 over 2009 was 13%.  However in 2011, their total earnings actually declined by 6% as compared with 2010.  Whew, again!

Likewise with the 35 Largest California Corps included in many Other Sectors, whose very robust total earnings growth in 2010 of 68% slipped to only a total earnings growth of 3% in 2011.  Whew, for a third time!

So why is it that these 202 Largest California Corps in all Sectors did so much better in 2010 than they did in both 2011 and in the 1Q 2012?  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 California State 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 nearly five 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, assuming that the cuts in business tax rates are focused primarily on the smaller businesses.

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 announced down earnings in its April 2012 quarter, it also announced it will be cutting 27,000 jobs, or 8% of its workforce.  And I have seen so many large Restructuring Charges, where significant job cuts always result, made by so many Corporations in their 1Q 2012 Earnings Statements, and made in the same quarter where their earnings growth has fallen off the cliff.


This massive earnings growth deceleration in both these Largest and Smaller California Corps, particularly in the first half of 2012, where this strong earnings growth has clearly stopped to a walk, and which has also occurred all throughout the country, is shouting out that 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.

If the US Government remains in gridlock for a long time, I think the US unemployment rate will continue to hover around 8%, and for a very long time, and perhaps even move up some, somewhat similar to what happened in Japan.  That is why it is so critical that there be a complete makeover of the US Congress in the upcoming November 2012 election.  This is the only way the US economy will be great again.

And given the present very fragile state of the US economy, if Mitt Romney is the next President, along with both the US House and the US Senate being in Republican control, I am pretty certain that the country will see a US unemployment rate which will average in the very low double digit percentages during the last three years of his four-year Presidential term.  And the middle class will be substantially depleted.

Romney, and his US Congressional allies, want a huge, no-strings-attached reduction in the corporate income tax rate.  What that would do is to dramatically increase the After-tax Net Income of all corporations, and by a substantial amount.  And how many US jobs are created by just reducing the corporate income tax rate?  Absolutely none, directly.  And very few, if any, indirectly.  To argue that a reduction in the corporate income tax rate would either directly or indirectly create a lot of US jobs is being either intellectually dishonest, or having a complete lack of competence on economic issues.


=======================================

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 Long-term 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, as well as Corps not generating significant revenues.

And below here is the Pretax Income (PTI) or Pretax Loss of each of these 202 Largest California Corporations for each of the most recent three fiscal years, along with the related percentage changes in earnings.

					US House	US House	Obama
					Republican	Democratic	Bump
					Control	Control	Two
					PTI(L)	PTI(L)	Year
					%	%	%
					Change	Change	Change
		PTI(L)	PTI(L)	PTI(L)	2011	2010	2011
	California	2011	2010	2009	vs	vs	vs
California Largest Corps	HQs	mils $s	mils $s	mils $s	2010	2009	2009
Technology
Apple	Cupertino	34,205	18,540	12,066	84%	54%	183%
Intel	Santa Clara	17,781	16,045	8,401	11%	91%	112%
Oracle	Redwood City	12,962	11,411	8,243	14%	38%	57%
Google	Mountain View	12,826	10,796	8,381	19%	29%	53%
Hewlett Packard	Palo Alto	11,080	11,267	9,657	-2%	17%	15%
Cisco Systems	San Jose	7,825	9,415	7,693	-17%	22%	2%
Qualcomm	San Diego	5,687	4,493	3,416	27%	32%	66%
Ebay	San Jose	2,503	2,098	1,668	19%	26%	50%
Applied Materials	Santa Clara	2,378	1,387	(486)	71%	385%	589%
Facebook	Menlo Park	1,695	1,008	254	68%	297%	567%
Sandisk	Milpitas	1,477	1,457	504	1%	189%	193%
Activision Blizzard	Santa Monica	1,331	818	401	63%	104%	232%
KLA Tencor	Milpitas	1,110	291	(156)	281%	287%	812%
Broadcom	Irvine	1,048	1,169	209	-10%	459%	401%
Adobe Systems	San Jose	1,035	943	702	10%	34%	47%
Agilent Technologies	Santa Clara	1,032	560	7	84%	7900%	14643%
Intuit	Mountain View	966	815	653	19%	25%	48%
Symantec	Mountain View	948	764	809	24%	-6%	17%
Altera	San Jose	849	868	306	-2%	184%	177%
Yahoo!	Sunnyvale	828	818	409	1%	100%	102%
Lam Research	Fremont	801	430	(167)	86%	357%	580%
Western Digital	Irvine	780	1,520	501	-49%	203%	56%
VMWare	Palo Alto	738	416	223	77%	87%	231%
Linear Technology	Milpitas	724	490	369	48%	33%	96%
NetApp	Sunnyvale	712	794	447	-10%	78%	59%
Check Point Software	Redwood City	683	564	446	21%	26%	53%
NVIDIA	Santa Clara	663	271	11	145%	2364%	5927%
Maxim Integrated Products	Sunnyvale	662	300	86	121%	249%	670%
Marvell Technology Group	Santa Clara	619	910	343	-32%	165%	80%
Xilinx	San Jose	597	771	422	-23%	83%	41%
Seagate Technology	Cupertino	579	1,569	(494)	-63%	418%	217%
Juniper Networks	Sunnyvale	572	778	494	-26%	57%	16%
Flextronics International	Silicon Valley	565	629	231	-10%	172%	145%
Dolby Laboratories	San Francisco	441	447	351	-1%	27%	26%
National Semiconductor	Santa Clara	403	269	114	50%	136%	254%
Ingram Micro	Santa Ana	388	438	269	-11%	63%	44%
Autodesk	San Rafael	363	272	106	33%	157%	242%
Netflix	Los Gatos	360	268	192	34%	40%	88%
Atmel	San Jose	346	228	(56)	52%	507%	718%
Novellus Systems	San Jose	293	305	(69)	-4%	542%	525%
Synnex	Fremont	230	184	135	25%	36%	70%
Synopsys	Mountain View	219	199	233	10%	-15%	-6%
Power One	Camarillo	214	278	(9)	-23%	3189%	2478%
Teledyne Technologies	Thousand Oaks	212	174	166	22%	5%	28%
Advanced Micro Devices	Sunnyvale	208	363	(1,003)	-43%	136%	121%
Informatica	Redwood City	167	121	90	38%	34%	86%
Trimble Navigation	Sunnyvale	167	141	88	18%	60%	90%
Fairchild Semiconductor Intl	San Jose	158	175	(63)	-10%	378%	351%
International Rectifier	El Segundo	158	29	(133)	445%	122%	219%
Polycom	Pleasanton	157	82	68	91%	21%	131%
TIBCO Software	Palo Alto	150	111	90	35%	23%	67%
Plantronics	Santa Cruz	143	141	101	1%	40%	42%
j2 Global	Los Angeles	137	111	110	23%	1%	25%
TTM Technologies	Santa Ana	136	109	21	25%	419%	548%
QLogic	Aliso Viejo	133	153	137	-13%	12%	-3%
ValueClick	Westlake Village	131	95	83	38%	14%	58%
Equinix	Redwood City	131	60	109	118%	-45%	20%
NETGEAR	San Jose	124	91	33	36%	176%	276%
Cypress Semiconductor	San Jose	121	94	(146)	29%	164%	183%
Cubic Corp	San Diego	118	106	85	11%	25%	39%
Sanmina-SCI	San Jose	116	103	(113)	13%	191%	203%
Quality Systems	Irvine	116	94	76	23%	24%	53%
Cymer	San Diego	108	121	17	-11%	612%	535%
Zynga	San Francisco	104	127	(53)	-18%	340%	296%
Atheros Communications	Santa Clara	103	39	34	164%	15%	203%
LSI Corp	Milpitas	94	38	(170)	147%	122%	155%
Brocade Communications Systems	San Jose	92	124	27	-26%	359%	241%
Quest Software	Aliso Viejo	86	115	105	-25%	10%	-18%
Cadence Design Systems	San Jose	79	(47)	(150)	268%	69%	153%
Logitech	Fremont	76	148	84	-49%	76%	-10%
United Online	Woodland Hills	75	90	118	-17%	-24%	-36%
Intersil	Milpitas	68	120	60	-43%	100%	13%
Omnivision Technologies	Santa Clara	64	129	10	-50%	1190%	540%
PMC Sierra	Sunnyvale	52	105	51	-50%	106%	2%
JDS Uniphase	Milpitas	46	(70)	(136)	166%	49%	134%
Finisar	Sunnyvale	45	101	1	-55%	10000%	4400%
Tessera Technologies	San Jose	41	107	123	-62%	-13%	-67%
Electronic Arts	Redwood City	18	(279)	(706)	106%	60%	103%
Rambus	Sunnyvale	6	85	106	-93%	-20%	-94%
Salesforce.com	San Francisco	(33)	104	142	-132%	-27%	-123%
Spansion	Sunnyvale	(35)	(100)	(139)	65%	28%	75%
FormFactor	Livermore	(68)	(134)	(142)	49%	6%	52%
Silver Spring Networks	Redwood City	(96)	(145)	(100)	34%	-45%	4%
THQ	Agoura Hills	(119)	(92)	(12)	-29%	-667%	-892%
Trident Microsystems	Sunnyvale	(143)	(156)	(51)	8%	-206%	-180%
SunPower	San Jose	(170)	94	44	-281%	114%	-486%
Total all 85 Technology Except Apple		100,589	91,730	54,311	10%	69%	85%
Total all 86 Technology		134,794	110,270	66,377	22%	66%	103%
Big Oil
Chevron	San Ramon	47,634	32,055	18,528	49%	73%	157%
Occidental Petroleum	Los Angeles	10,459	7,634	5,038	37%	52%	108%
Total 2 Big Oil		58,093	39,689	23,566	46%	68%	147%
Finance Including REITs
Wells Fargo	San Francisco	23,656	19,001	17,998	24%	6%	31%
Visa	San Francisco	5,656	4,638	3,527	22%	31%	60%
Franklin Resources	San Mateo	2,624	2,070	1,289	27%	61%	104%
Toyota Motor Credit	Torrance	2,423	3,003	1,679	-19%	79%	44%
Charles Schwab	San Francisco	1,392	1,231	1,276	13%	-4%	9%
UnionBanCal	San Francisco	1,081	793	(226)	36%	451%	578%
Public Storage	Glendale	774	693	697	12%	-1%	11%
International Lease Finance Corp	Los Angeles	764	898	1,469	-15%	-39%	-48%
HCP	Long Beach	645	376	278	72%	35%	132%
First Republic Bank	San Francisco	555	470	606	18%	-22%	-8%
SVB Financial Group	Santa Clara	402	198	50	103%	296%	704%
East West Bancorp	Pasadena	383	233	(366)	64%	164%	205%
KKR Financial Holdings	San Francisco	326	332	46	-2%	622%	609%
City National	Beverly Hills	246	134	12	84%	1017%	1950%
Mercury General	Los Angeles	245	182	572	35%	-68%	-57%
Cathay General Bancorp	Los Angeles	172	12	(129)	1333%	109%	233%
Digital Realty Trust	San Francisco	158	106	91	49%	16%	74%
Realty Income	Escondido	153	122	120	25%	2%	28%
Alexandria Real Estate Equities	Pasadena	143	124	124	15%	0%	15%
First American Financial	Santa Ana	130	212	204	-39%	4%	-36%
Anworth Mortgage Asset	Santa Monica	123	110	130	12%	-15%	-5%
Westamerica Bancorporation	San Rafael	121	131	134	-8%	-2%	-10%
CVB Financial	Ontario	121	87	68	39%	28%	78%
PS Business Parks	Glendale	100	96	91	4%	5%	10%
PacWest Bancorp	Rancho Santa Fe	88	(109)	(84)	181%	-30%	205%
Pacific Capital Bancorp	Santa Barbara	70	(150)	(346)	147%	57%	120%
Hanmi Financial	Los Angeles	29	(88)	(153)	133%	42%	119%
Redwood Trust	Mill Valley	25	111	35	-77%	217%	-29%
KBS Real Estate Investment Trust	Newport Beach	(67)	5	(162)	-1440%	103%	59%
MPG Office Trust	Los Angeles	(125)	(101)	(110)	-24%	8%	-14%
Prologis	San Francisco	(169)	(309)	(125)	45%	-147%	-35%
Total all 31 Finance		42,244	34,611	28,795	22%	20%	47%
Health Care
Amgen	Thousand Oaks	5,013	5,435	5,204	-8%	4%	-4%
Gilead Sciences	Foster City	3,741	4,050	3,502	-8%	16%	7%
McKesson	San Francisco	2,068	1,920	1,864	8%	3%	11%
Allergan	Irvine	1,336	1,175	833	14%	41%	60%
Intuitive Surgical	Sunnyvale	710	572	396	24%	44%	79%
Varian Medical Systems	Palo Alto	589	533	475	11%	12%	24%
Herbalife Ltd	Los Angeles	560	395	291	42%	36%	92%
Life Technologies	Carlsbad	479	459	207	4%	122%	131%
CareFusion	San Diego	457	414	338	10%	22%	35%
ResMed	San Diego	304	261	202	16%	29%	50%
Edwards Lifesciences	Irvine	284	268	217	6%	24%	31%
Bio-Rad Laboratories	Hercules	236	220	186	7%	18%	27%
Illumina	San Diego	219	190	143	15%	33%	53%
VCA Antech	Los Angeles	197	192	220	3%	-13%	-10%
Gen-Probe	San Diego	145	147	140	-1%	5%	4%
Health Net	Woodland Hills	138	298	256	-54%	16%	-46%
Molina Healthcare	Long Beach	129	89	38	45%	134%	239%
Jazz Pharmaceuticals	Silicon Valley	125	45	(7)	178%	743%	1886%
Coherent	Santa Clara	124	58	(17)	114%	441%	829%
Questcor Pharmaceuticals	Anaheim	114	54	42	111%	29%	171%
Thoratec	Pleasanton	112	93	43	20%	116%	160%
Impax Laboratories	Hayward	98	293	80	-67%	266%	23%
Align Technology	San Jose	90	102	36	-12%	183%	150%
Exelixis	South San Francisco	75	(100)	(133)	175%	25%	156%
Rigel Pharmaceuticals	South San Francisco	(86)	38	(112)	-326%	134%	23%
Amylin Pharmaceuticals	San Diego	(95)	(152)	(186)	38%	18%	49%
Arena Pharmaceuticals	San Diego	(98)	(117)	(156)	16%	25%	37%
Pacific Biosciences	Menlo Park	(109)	(140)	(88)	22%	-59%	-24%
Theravance	South San Francisco	(115)	(84)	(85)	-37%	1%	-35%
DJO Finance LLC	Vista	(116)	(66)	(80)	-76%	18%	-45%
Nektar Therapeutics	San Francisco	(132)	(24)	(103)	-450%	77%	-28%
Intermune	Brisbane	(155)	122	(95)	-227%	228%	-63%
Total all 32 Health Care		16,437	16,740	13,651	-2%	23%	20%
Leisure & Entertainment
Walt Disney	Burbank	8,043	6,627	5,658	21%	17%	42%
DIRECTV	El Segundo	3,984	3,514	2,325	13%	51%	71%
DreamWorks Animation	Glendale	129	187	203	-31%	-8%	-36%
Live Nation Entertainment	Beverly Hills	(97)	(168)	(115)	42%	-46%	16%
TiVo	Alviso	(128)	(84)	(24)	-52%	-250%	-433%
Total all 5 Leisure & Entertainment		11,931	10,076	8,047	18%	25%	48%
Retail
GAP	San Francisco	1,369	1,982	1,816	-31%	9%	-25%
Ross Stores	Pleasanton	1,053	897	719	17%	25%	46%
Safeway	Pleasanton	882	881	1,021	0%	-14%	-14%
Guess	Los Angeles	419	421	362	0%	16%	16%
Williams Sonoma	San Francisco	382	323	120	18%	169%	218%
Copart	Fairfield	264	239	228	10%	5%	16%
Cheesecake Factory	Calabasas Hills	129	111	78	16%	42%	65%
Jack in the Box	San Diego	126	106	211	19%	-50%	-40%
DineEquity	Glendale	120	95	(9)	26%	1156%	1433%
99 Cents Only Stores	City of Commerce	118	94	24	26%	292%	392%
Guitar Center	Westlake Village	(105)	(86)	(91)	-22%	5%	-15%
Total all 11 Retail		4,757	5,063	4,479	-6%	13%	6%
Other Sectors
Mattel	El Segundo	971	847	660	15%	28%	47%
Clorox	Oakland	821	805	709	2%	14%	16%
URS	San Francisco	580	514	454	13%	13%	28%
Jacobs Engineering Group	Pasadena	517	479	624	8%	-23%	-17%
Reliance Steel & Aluminum	Los Angeles	512	297	196	72%	52%	161%
Monster Beverage	Corona	457	349	336	31%	4%	36%
CBRE Group	Los Angeles	430	290	28	48%	936%	1436%
Aecom Technology	Los Angeles	384	341	278	13%	23%	38%
Deckers Outdoor	Goleta	285	250	183	14%	37%	56%
Bridgepoint Education	San Diego	277	218	82	27%	166%	238%
Robert Half International	Menlo Park	250	115	67	117%	72%	273%
Avery Dennison	Pasadena	243	244	(47)	0%	619%	617%
Del Monte Corp	San Francisco	215	458	418	-53%	10%	-49%
Cooper Companies	Pleasanton	209	152	115	38%	32%	82%
Levi Strauss	San Francisco	203	252	190	-19%	33%	7%
Tetra Tech	Pasadena	140	123	119	14%	3%	18%
Tutor Perini	Sylmar	137	159	205	-14%	-22%	-33%
Wesco Aircraft	Valencia	128	118	96	8%	23%	33%
UTi Worldwide	Long Beach	120	108	66	11%	64%	82%
Ceradyne	Costa Mesa	119	29	8	310%	263%	1388%
Corinthian Colleges	Santa Ana	117	241	117	-51%	106%	0%
Yasheng Group	Redwood City	114	97	77	18%	26%	48%
Breitburn Energy Partners	Los Angeles	112	35	(109)	220%	132%	203%
Granite Construction	Watsonville	89	(12)	139	842%	-109%	-36%
Central Garden & Pet	Walnut Creek	48	88	104	-45%	-15%	-54%
Century Aluminum	Monterey	22	68	(150)	-68%	145%	115%
Gymboree	San Francisco	(10)	55	165	-118%	-67%	-106%
Standard Pacific	Irvine	(16)	18	(102)	-189%	118%	84%
Shea Homes Limited Partnership	Walnut	(22)	(59)	(501)	63%	88%	96%
Ryland Group	Westlake Village	(31)	(61)	(251)	49%	76%	88%
Skechers USA	Manhattan Beach	(97)	197	71	-149%	177%	-237%
Amyris	Emeryville	(179)	(83)	(65)	-116%	-28%	-175%
KB Home	Los Angeles	(181)	(76)	(311)	-138%	76%	42%
Tesla Motors	Palo Alto	(254)	(154)	(56)	-65%	-175%	-354%
Leap Wireless	San Diego	(254)	(206)	(171)	-23%	-20%	-49%
Total all 35 in Other Sectors		6,456	6,296	3,744	3%	68%	72%
Grand Total all 202		274,712	222,745	148,659	23%	50%	85%