On March 22, communications-gadget whiz Palm (NASDAQ:PALM) released third-quarter 2007 earnings for the period ended Feb. 28.
- Earnings came in at the low end of management guidance, while revenues topped the forecast range by $1 million. Those Treo smartphones are selling like hotcakes, in other words, but the company could do a better job of turning those sales into profits.
- The merger rumors swirling around Palm came to nothing in the end, as neither Nokia (NYSE:NOK) nor Motorola (NYSE:MOT) felt compelled to make a bid. Both of those competitors harbor much stronger net and operating margins than Palm, even before this downhill slide, so maybe it was a vote of fiscal no-confidence.
- Or maybe it's jitters about the coming Apple (NASDAQ:AAPL) iPhone and that rumored Google (NASDAQ:GOOG) phone (gPhone?), both of which could encroach on Palm's territory. Either of those companies have enough cash on hand to buy this small-cap swinger outright, should they feel like it.
- Management expect essentially a repeat performance in the fourth quarter, with similar earnings and revenue ranges.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q3 2007 |
Q3 2006 |
Change | |
|---|---|---|---|
|
Sales |
$411 |
$389 |
5.7% |
|
Net Profit |
$12 |
$30 |
(60.7%) |
|
EPS |
$0.11 |
$0.28 |
(60.7%) |
|
Diluted Shares |
103.7 |
106.0 |
(2.1%) |
Get back to basics with the income statement.
Margin Checkup
|
Q3 2007 |
Q3 2006 |
Change* | |
|---|---|---|---|
|
Gross Margin |
36.9% |
33.6% |
3.2 |
|
Operating Margin |
3.1% |
7.4% |
(4.3) |
|
Net Margin |
2.9% |
7.7% |
(4.9) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q3 2007 |
Q3 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$504 |
$536 |
(6.0%) |
|
Accounts Rec. |
$214 |
$119 |
79.6% |
|
Inventory |
$38 |
$51 |
(26.6%) |
|
Liabilities |
Q3 2007 |
Q3 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$199 |
$157 |
26.9% |
|
Long-Term Debt |
$0 |
$0 |
N/A |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q3 2007 |
Q3 2006 |
Change | |
|---|---|---|---|
|
Cash From Ops. |
$83 |
$91 |
(8.6%) |
|
Capital Expenditures |
$5 |
$4 |
34.5% |
|
Free Cash Flow |
$78 |
$87 |
(10.6%) |
|
$14 |
$31 |
(54.3%) |
Free cash flow is a Fool's best friend.
Related Foolishness:
- Foolish Forecast: New Palm Tricks
- iPhone Calling?
- Google's Calling?
- Motorola in Motion
- Foolish Fundamentals: Margins
Palm is a Motley Fool Stock Advisor selection. Get a free 30-day trial pass to our premium newsletter service and find out what the hoopla is all about.
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.
