Editor's note: An earlier version of this story indicated Novell spent $400,000 on stock repurchases. The number should have been $4 million. We regret the error.

On Dec. 5, software company Novell (NASDAQ:NOVL) released preliminary fourth-quarter 2006 earnings for the period ended Oct. 31.

  • Much of this report should be taken with a grain of salt, pending the completion of an internal review of stock options-granting practices. Novell needs to restate results several years back, and the impact on current results and balances isn't known now.
  • Linux platform revenues increased 32% year over year, while NetWare-related sales decreased 25%. I've said it before and I'll say it again: It's not too late to sell that aging product line to someone better equipped to support outdated technology, like IBM (NYSE:IBM), Electronic Data Systems (NYSE:EDS), or even Robert Half International (NYSE:RHI), and focus the company's assets on success in the booming Linux market.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$244.9

$287.6

(14.9%)

Net Profit

$22.4

-$5.0

N/A

EPS

$0.06

($0.01)

N/A

Diluted Shares

395.5

382.3

3.4%



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

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

68.57%

69.04%

(0.47)

Operating Margin

1.00%

(4.32%)

5.32

Net Margin

9.13%

(1.72%)

10.85

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$1,467.3

$1,654.9

(11.3%)

Accounts Rec.

$234.0

$293.6

(20.3%)



Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$44.4

$45.4

(2.3%)

Long-Term Debt

$600.0

$600.0

0.0%



Learn the ways of the balance sheet.

Cash Flow Highlights

Q4 2006

Q4 2005

Change

Cash From Ops.

$62.3

$58.3

6.9%

Capital Expenditures

$7.1

$10.6

(32.8%)

Free Cash Flow

$55.1

$47.7

15.7%

Owner Earnings

$44.0

$48.6

(9.5%)



Find out why Fools always follow the money.

Cash Management Checkup

Q4 2006

Q4 2005

Change

Days in Receivables

86.4

85.9

0.5

Days Payables Outstanding

49.5

51.2

(1.7)



Read up on cash conversion metrics.

Related Companies:

  • Red Hat (NASDAQ:RHAT)
  • Oracle (NASDAQ:ORCL)
  • Microsoft (NASDAQ:MSFT)

Related Foolishness:

Microsoft is an Inside Value recommendation. Get afree 30-day trialtoday and see what other giants are on sale.

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 check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned, though Robert Half once failed to find him a job. It all worked out, guys -- no hard feelings. Fool rules are here.