Overview
The MW IT Index® (US Edition) is an analysis using securities that are weighted according to the market value of their outstanding shares. The Index includes 120 companies traded in the U.S. stock markets (NYSE, NASDAQ and OTC) that are a composite representative sampling of enterprise values in the following categories:
1. IT Services & Business Process Outsourcing (BPO)
• 52 companies, including seven in BPO
2. IT Supply Chain Services
• 23 companies
3. Software
• 41 companies, including 16 in SaaS
The MW IT Index (US Edition) starts on December 31, 2007 with a value of 1000. Companies used for the MW IT Index must be traded on a U.S. stock exchange. Consequently, Cognizant, which is an Indian outsourcing company trading in the U.S., is included, but Rolta, which does not trade in the U.S., is not included. So consequently a company like Cognizant is included, which is an Indian outsourcing company trading in the U.S., but not Rolta which does not trade in the U.S.
For a copy of our 1Q12 MW IT Index® (US Edition), go here.
1Q12 Analysis
In our analysis we look at industries in each of four phases:
1. EARLY PHASE is when the industry is being established. Enterprise value is growing, but not yet realized through historical transactions. The early phase traditionally attracts more institutional money from private equity and venture capital.
2. GROWTH PHASE is when there are many companies starting up and being sold as the market begins to clearly define itself. Enterprise value is accelerating. At this phase, the market has fast growth, and enterprises have stable or improving margins for goods and services.
3. MATURE PHASE is when there is consolidation, and clear leaders emerge. Enterprise value is declining and margins are narrowing. At this phase, industry growth is slowing, and margins are on the decline.
4. DECLINE PHASE is where few companies are left or the industry ceases to existing markets, and many products/services are commoditized. Enterprise value is minimal.
Description and Formula
The MW IT Index® is a market-value-weighted index. The representation of each security in the index is proportional to its last sales price times the total number of shares outstanding, relative to the total market value of the respective index.
Adjustments for securities being added to or deleted from the index, or capitalization changes, are made periodically. Stock splits and stock dividends are likewise adjusted for during the process. In the case of cash dividends, no adjustment is made.