The Delta of Technology
A New Metric for Analyzing R&D
by
Book Cover & Preview Text
This book has been a labor of love since 1978 and as an engineer and a former director of technology it has satisfied my desire to know one thing: Can the impact of R&D investment on earnings be measured? The clear answer in my book is yes and much more. The "much more" part is even more fascinating.
The analysis is simple and over-arching, beyond operating income statements, balance sheets, project life cycle analyses, economic value added and all the other sundry and elaborate auditing contrivances of the bookkeeping community.
All throughout these many years since 1978 I have witnessed the various techniques for analyzing the above question in the popular financial journals, academia and of course in the accounting world. Many have claimed that there is no correlation between R&D expenditures and earnings when they graph these two factors for hundreds of companies. Others list out the top one hundred R&D spenders and find that many of these top spenders don’t perform well; witness the earnings problems of GM and Ford, who either lead the list or are within the top five R&D spenders. Still others are amazed that many pharma companies return great earnings, and also spend large sums on R&D.
Most analysts of R&D don’t have a clue! Most grandmothers, however, who shop at Walmart and have 401k plans understand that R&D is essential to producing the affordable miracles that we all purchase in our free market system and that there must be a connection.
I am reminded by all of this expert analysis, of the person who repeats a failed attempt to solve a problem over and over in the vain hope that someday it may work. As the cliché goes this is called insanity or the government.
In this book the reader will be introduced to the concept called The Delta of Technology, a figure of merit which can discriminate the best companies from the rest and ultimately determine that portion of Earnings attributable to R&D investment. The Delta only requires three analytical numbers, all of which are carried around in the head of a CEO. These numbers are the R&D expenditure, the gross sales (revenues) and the net earnings for a given year.
Enjoy the book and become part of the new paradigm by asking your CFO, "what is our company Delta?"
Lastly, what about ordinary small investors, who would like to participate in the technology revolution , but want safety and guidelines that give them a much better chance of success? To them I say, read this book.
Formats
Book Details
About the Book
This book is for company executives, security analysts and investors in technology companies who want to separate the best companies from the rest by an earnings driven, yet simple analysis.
You only have to know how to add and subtract, multiply and divide three numbers.
If you think that you don’t need this, then answer the following questions by talking with your CFO for the next five minutes.
- Do you have a single benchmarking tool for measuring the impact of R&D earnings for your company?
- Can you measure the risk to Earnings by under or over investing in R&D?
Understand the critical interaction between R&D and Capital expenditures.
See how other great business enterprises stack up against yours in clear graphical expositions.
The power of the © Delta Model
The © Delta model employs a unique but simple arithmetic computation using three numbers carried around in every executive’s head, namely Sales, Earnings, and R&D investment. The analysis can be done, in minutes, to provide an overall assessment of a company’s performance in deploying R&D assets.
If you are an investor or security analyst searching for high quality technology companies, but want to keep your risk down, use the © Delta Model to select large capital companies with proven earnings that successfully deploy R&D. See the power of this approach over time to create value in the stock market. Understand why huge R&D spending doesn’t necessarily translate into profits and stock growth.
About the Author
Biography of the Author
He received a lifetime achievement award in 1997 called the Eveready Excellence Award, for his work in Technology and Quality.
He currently lives in Grafton
The Delta Of Technology, introduces a significant concept called The © Delta model that employs a simple arithmetic, which anyone can use in minutes, to provide an overall assessment of a company’s success in deploying R&D.