Cash Flow Trends in Several Technology Industries

The Cash Flow Growth Profile(TM) measures the capacity of a firm to generate cash flow as it grows revenue. The metric is forward looking and reports the amount of incremental cash flow that can be expected for any measured amount of growth in revenue. In this report, using data obtained through the second quarter of 2008, we examine the Cash Flow Growth ProfileTM of five technology industries: computer hardware, computer software, information technology services, telecommunications equipment, and semiconductors and related capital equipment. We look at trends in the Profile for the industries and for 59 individual companies. In examining the Cash Flow Growth Profile(TM), the drivers or determinants of core operating cash flow and free cash flow are highlighted. Looking at the industry data, there is little evidence of a decline in operating performance through the second quarter of 2008. Indeed, only two industries, Computer Hardware and Information Technology Services saw declines in their Free Cash Growth Profile(TM) for the twelve months ending with the second quarter of 2008 from the same period in 2007