A Palm Reading: Fool by Numbers

On Sept. 20, Motley Fool Stock Advisor selection Palm (Nasdaq: PALM  ) released Q1 2007 earnings for the period ended Aug. 31, 2006.

  • Street estimates didn't account for stock-based compensation or amortization of intangibles. Excluding those charges, which totaled a little more than $7 million, Palm earned $0.21 per stub, easily beating analyst projections.
  • Sales, too, came in higher than expected at $355.8 million.
  • Guidance, however, was not as promising. For Q2, management expects sales to improve to between $430 million and $450 million, resulting in $0.20 to $0.23 per stub in net income after accounting non-cash expenses. Analysts had projected $0.28 a share in earnings on $472 million in revenue.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q1 2007

Q1 2006

Change

Sales

$354,380

$355,773

$342,200

4.0%

Net Profit

--

$16,503

$18,177

(9.2%)

EPS

$0.18

$0.16

$0.18

(11.1%)

Diluted Shares

104,590

103,613

0.9%



Get back to basics with a look at the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

36.90%

30.49%

6.41

Operating Margin

6.58%

5.35%

1.23

Net Margin

4.64%

5.31%

(0.67)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$527,869

$411,342

28.3%

Accounts Rec.

$168,130

$128,491

30.8%

Inventory

$51,875

$140,162

(63.0%)



Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$147,327

$135,720

8.6%

Long-Term Debt

$35,000

$35,000

0.0%



Learn the ways of the balance sheet.

Cash Flow Checkup

Q1 2007

Q1 2006

Change

Cash From Ops.

$20,863

$48,874

(57.3%)

Capital Expenditures

$5,936

$6,906

(14.0%)

Free Cash Flow

$14,927

$41,968

(64.4%)



Find out why Fools always follow the money.

Related Companies:

  • Microsoft (Nasdaq: MSFT  )
  • Motorola (NYSE: MOT  )
  • Nokia (NYSE: NOK  )
  • Research In Motion (Nasdaq: RIMM  )

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.comfor more of our in-depth discussion of what the numbers mean.

Palm is a Motley Fool Stock Advisor recommendation. Ask for an all-access pass to the service, and you'll get 30 days to find out how David and Tom Gardner are walloping the market by more than 39 percentage points.

Microsoft is a Motley Fool Inside Value pick.

Fool contributor Tim Beyers owns shares of Nokia. You can find out which stocks he owns by checking Tim's Fool profile. The Motley Fool's disclosure policy is a bird in the hand.


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