Very Verizon: Fool by Numbers

On Jan. 29, telecom giant Verizon (NYSE: VZ  ) released fourth-quarter earnings for the period ended Dec. 31, 2006.

• The number of phone-line customers may be dropping, but Verizon is turning in great numbers in data communications and mobile phone services to cover that shortfall.
• The year-ago numbers included a $0.12 net gain per share from discontinued operations, while this year saw a $0.12 charge on the same line. On a continuing operations basis, then, we're talking about an earnings drop from $0.48 per share to $0.47.
• Verizon is paying down debt and stacking up on cash, though shareholders might appreciate other cash uses like dilution control. The company spent $1.7 billion on share repurchases and paid out $4.7 billion in dividends in 2006, out of $23 billion in operational cash flow.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$22,598	$17,927	26.1%
Net Profit	$1,032	$1,658	(37.8%)
EPS	$0.35	$0.60	(41.7%)
Diluted Shares	2,916	2,764	5.5%

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

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	59.9%	65.2%	(5.2)
Operating Margin	15.2%	17.6%	(2.3)
Net Margin	4.6%	9.3%	(4.7)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Management Effectiveness

	Q4 2006	Q4 2005	Change*
Return on Assets	2.2%	3.9%	(1.7)
Return on Equity	8.8%	16.8%	(8.1)

*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.	$5,653	$2,906	94.5%
Accounts Rec.	$10,891	$8,534	27.6%
Inventory	$1,514	$1,522	(0.5%)

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable	$14,320	$11,747	21.9%
Long-Term Debt	$28,646	$31,569	(9.3%)

Learn the ways of the balance sheet.

Cash Flow Highlights

	Q4 2006	Q4 2005	Change
Cash From Ops.	$5,855	$6,737	(13.1%)
Capital Expenditures	$4,823	$3,654	32.0%
Free Cash Flow	$1,032	$3,083	(66.5%)
Owner Earnings	$1,708	$1,698	0.6%

Find out why Fools always follow the money.

Cash Conversion Checkup

	Q4 2006	Q4 2005	Change
Days in Inventory	15.7	21.8	(6.1)
Days in Receivables	43.3	44.9	(1.6)
Days Payables Outstanding	143.2	176.6	(33.4)
Cash Conversion Cycle	(84.2)	(109.9)	25.7

Read up on cash conversion metrics.

Related Companies:

• AT&T (NYSE: T  )
• Comcast (Nasdaq: CMCSA  )
• Sprint Nextel (NYSE: S  )
• Vonage (NYSE: VG  )

Related Foolishness:

• AT&T's Wireless Ways Win: Fool by Numbers
• Net Neutrality Rises Again

AT&T is a former Motley Fool Stock Advisor recommendation. Discover which companies are currently recommended for subscribers by taking a free 30-day trial today.

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 had no position in any company mentioned. Fool rules are here.