Whoever thinks a faultless piece to see,
Thinks what ne'er was, nor is, nor e'er shall be.
-- Alexander Pope, "An Essay On Criticism"
On April 24, Unix System veteran Sun Microsystems
- Sun scraped together its second profitable quarter in a row, albeit powered by negative operating margins. It can be nice to have a strong and interest-generating balance sheet sometimes.
- Cash flows, including the structural cash flows we Fools like to call owner earnings, were much stronger across the board, and much healthier than the GAAP net income. That's usually a sign of conservative accounting and a lack of market-pandering shenanigans.
- Management says that next quarter's revenues should be much stronger, as big customers supposedly delayed purchases until a new product line is launched this spring.
(Figures in millions, except per-share data)
Income Statement Highlights
Q3 2007 |
Q3 2006 |
Change |
|
---|---|---|---|
Sales |
$3,283 |
$3,177 |
3.3% |
Net Profit |
$67 |
($217) |
N/A |
EPS |
$0.02 |
($0.06) |
N/A |
Diluted Shares |
3661.0 |
3443.0 |
6.3% |
Get back to basics with the income statement.
Margin Checkup
Q3 2007 |
Q3 2006 |
Change* |
|
---|---|---|---|
Gross Margin |
44.5% |
43.0% |
1.5 |
Operating Margin |
(1.4%) |
(6.7%) |
5.3 |
Net Margin |
2.0% |
(6.8%) |
8.9 |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
Q3 2007 |
Q3 2006 |
Change |
---|---|---|---|
Cash + ST Invest. |
$4,114 |
$2,872 |
43.2% |
Accounts Rec. |
$2,458 |
$2,301 |
6.8% |
Inventory |
$567 |
$574 |
(1.2%) |
Liabilities |
Q3 2007 |
Q3 2006 |
Change |
---|---|---|---|
Accounts Payable |
$1,214 |
$1,315 |
(7.7%) |
Long-Term Debt |
$1,270 |
$585 |
117.1% |
The balance sheet reflects the company's health.
Cash Flow Highlights
Q3 2007 |
Q3 2006 |
Change |
|
---|---|---|---|
Cash From Ops. |
$485 |
$197 |
146.2% |
Capital Expenditures |
$73 |
$76 |
(3.9%) |
Free Cash Flow |
$412 |
$121 |
240.5% |
$203 |
($65) |
N/A |
Free cash flow is a Fool's best friend.
Related Foolishness:
- Foolish Forecast: Sun Opens to New Realms
- This Stock Is Cheap -- or Is It?
- Save Yourself From Massive Losses
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.