On Jan. 25, chip foundry Taiwan Semiconductor Manufacturing (NYSE:TSM) released fourth-quarter earnings for the 2006 fiscal year ending Dec. 31, 2006.

  • This was a tough quarter any way you slice it, and once again the finger is pointed at sluggish demand for high-end cell phones. Entry-level phones are based on low-end chipsets, and semiconductor foundries like TSM make their big money when Texas Instruments (NYSE:TXN), Analog Devices (NYSE:ADI), and their peers need a hand with top-of-the-line manufacturing.
  • The good news is that earnings are still positive, and both kinds of cash flows actually increased. $630 million of depreciation and amortization helped with that.
  • The stock price dropped 6% on this news, but the company still has a four-star CAPS rating. Find out why your fellow Fools like TSM, and weigh in with your own take on this company -- or any company at all.

(Figures in millions, except per-share data; dollar values as reported by the company)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$2,283

$2,412

(5.4%)

Net Profit

$853

$1,032

(17.4%)

EPS

$0.17

$0.21

(19.0%)

Diluted Shares

5163.0

4938.6

4.5%


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

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

46.0%

58.4%

(12.5)

Operating Margin

36.6%

43.4%

(6.9)

Net Margin

37.4%

42.8%

(5.4)
*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Management Effectiveness

Q4 2006

Q4 2005

Change*

Return On Assets

19.5%

26.8%

(7.4)

Return On Equity

22.6%

31.8%

(9.2)
*Expressed in percentage points.

See how management puts its financial tools to work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$5,985

$4,470

33.9%

Accounts Rec.

$969

$1,169

(17.1%)

Inventory

$657

$540

21.7%


Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$631

$563

12.1%

Long-Term Debt

$383

$614

(37.6%)


Learn the ways of the balance sheet.

Cash Flow Highlights

Q4 2006

Q4 2005

Change

Cash From Ops.

$1,711

$1,525

12.2%

Capital Expenditures

$587

$415

41.6%

Free Cash Flow

$1,124

$1,110

1.2%

Owner Earnings

$900

$1,186

(24.1%)


Find out why Fools always follow the money.

Related Companies:

  • Cypress Semiconductor (NYSE:CY)
  • National Semiconductor (NYSE:NSM)
  • ARM Holdings (Nsadaq: ARMHY)
  • United Microelectronics (NYSE:UMC)

Related Foolishness:

ARM is a Motley Fool Stock Advisor recommendation. Find out more with a free 30-day trial subscription.

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, Anders Bylund was a Taiwan Semiconductor Manufacturing shareholder but had no position in any other company mentioned. Fool rules are here.