Friday, August 06, 2010

Almost 50% of Sales of S&P Companies Come from Outside the U.S.

For many years, I have tried to find a way to extract information about international sales from the financial reports of public companies in the United States, what Common Sense Advisory calls xenorevenue. In addition to my personal research, I have talked to data service companies to find a way to automatically extract this information from their databases, to no avail.

Today, the Investing Insights blog in Bloomberg BusinessWeek, shares my frustration by stating that "While globalization is apparent in almost all company reports, exact sales and export levels are difficult to obtain. Many companies tend to categorize sales by regions or markets, while others segregate government sales. Additionally, intra-company sales, and hence profits, are sometimes structured to take advantage of trade, tax and regulatory polices. The resulting reported data available for shareholders is therefore significantly less than the desired level for analysis."

However, their analyst was able to look at data from half of the S&P 500 companies, which gives us a good indication of the level of international activity of large American corporations and helps us build a business case for translation expenditures.

While Howard Silverblatt, the author of the posting, focuses on comparing international sales with previous years (they have declined!), I was more interested at the actual volumes of international sales, which are higher than I would have guessed. According to the report, of the reporting 250 companies, 46.6% of all sales were produced and sold outside of the United States, compared to 47.9% in 2008, 45.8% in 2007, and 43.6% in 2006.

But what is no surprise to Localization veterans, is that Information Technology continued to be the dominating sector with over 56% of its declared sales being foreign in nature. The IT sector represents 20.4% of all U.S. foreign sales.

The full report with more detailed data, including some geographic breakdown, is available in PDF format here.

I will analyze this data more thoroughly and write a follow-up post.

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