In-line earnings
Big Blue shows;
Margins solid, sales move slow
That's a very simple "name poem" in honor of National Poetry Month, and the fact that IBM
- The company's stated long-term goal is annual EPS growth of 10%-12%, so these results clock in at the top of internal expectations. Margins were stable enough across the board, and the generous share buyback program pushed the return over the targeted edge.
- The operating cash flow excludes receivables for the Global Financing operations, as that's more of an income-generating $2.4 billion investment balance than working capital.
- As much as Oracle
(NASDAQ:ORCL) and SAP AG(NYSE:SAP) like to mention their successes in competing with IBM, Big Blue preferred to state that WebSphere is gaining share in the middleware space, and leave it at that. Call it confidence or call it arrogance, salt to taste, serve with coleslaw and a frosty cup of lemonade.
(Figures in millions, except per-share data)
Income Statement Highlights
Q1 2007 |
Q1 2006 |
Change |
|
---|---|---|---|
Sales |
$22,029 |
$20,659 |
6.6% |
Net Profit |
$1,844 |
$1,708 |
8% |
EPS |
$1.21 |
$1.08 |
12% |
Diluted Shares |
1522.8 |
1587.2 |
(4.1%) |
Get back to basics with the income statement.
Margin Checkup
Q1 2007 |
Q1 2006 |
Change* |
|
---|---|---|---|
Gross Margin |
40.3% |
39.2% |
1.1 |
Operating Margin |
11.7% |
11.8% |
(0.1) |
Net Margin |
8.4% |
8.3% |
0.1 |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
Q1 2007 |
Q1 2006 |
Change |
---|---|---|---|
Cash + ST Invest. |
$10,781 |
$12,302 |
(12.4%) |
Accounts Rec. |
$31,665 |
$29,281 |
8.1% |
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
---|---|---|---|
Accounts Payable |
$27,102 |
$26,108 |
3.8% |
Long-Term Debt |
$14,285 |
$15,325 |
(6.8%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
Q1 2007 |
Q1 2006 |
Change |
|
---|---|---|---|
Cash From Ops. |
$950 |
$710 |
33.8% |
Capital Expenditures |
$1,100 |
$950 |
15.8% |
Free Cash Flow |
($150) |
($240) |
37.5% |
Cash flow information taken from the earnings conference call.
Free cash flow is a Fool's best friend.
Related Foolishness:
- Foolish Forecast: IBM's Odyssey
- Can IBM Improve Your Investing Vision?
- IBM Develops Its Future
- Foolish Fundamentals: The Income Statement
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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.