On Jan. 24, network equipment designer Juniper Networks
- The company took a goodwill impairment charge for $1.28 billion in 2006, which sank almost the entire income statement into a red-ink bath. Without that non-cash item, we'd be comparing against $282 million in non-GAAP net income and a 12.2% net margin.
- Juniper hasn't been debt-free since 2000, when the company took on a $1.1 billion loan to buy back some shares and make short-term investments. Call it a recapitalization move, if you will, but the effects of it have now been entirely reversed.
- The capital strategy today looks quite different, with the company selling short-term investments to finance generous share buybacks.
- No matter the financial tactics, it appears that the small fry in this networking pond have a hard time matching up with sector leaders such as Cisco Systems
and, to a lesser degree, Juniper. CAPS stars fall from the sky because the earnings aren't there.(Nasdaq: CSCO)
(Figures in millions, except per-share data)
Income Statement Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Sales |
$2,836 |
$2,304 |
23.1% |
Net Profit |
$361 |
($1,001) |
N/A |
Earnings Per Share |
$0.62 |
($1.76) |
N/A |
Diluted Shares |
579.1 |
567.5 |
2.1% |
Get back to basics with the income statement.
Margin Checkup
FY 2007 |
FY 2006 |
Change* |
|
---|---|---|---|
Gross Margin |
67.3% |
67.3% |
0.0 |
Operating Margin |
14.4% |
(43.3%) |
57.7 |
Net Margin |
12.7% |
(43.5%) |
56.2 |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Cash + Short-Term Investments |
$1,956 |
$2,040 |
(4.1%) |
Accounts Receivable |
$380 |
$249 |
52.2% |
Liabilities |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Accounts Payable |
$219 |
$180 |
22.0% |
Long-Term Debt |
$0 |
$400 |
N/A |
The balance sheet reflects the company's health.
Cash Flow Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Cash From Operations |
$798 |
$756 |
5.6% |
Capital Expenditures |
$147 |
$102 |
43.8% |
Free Cash Flow |
$651 |
$654 |
(0.4%) |
$400 |
$353 |
13.3% |
Free cash flow is a Fool's best friend.
Competitive Context
Market Cap |
Trailing P/E Ratio |
CAPS Rating |
|
---|---|---|---|
Cisco Systems |
$152,160 |
19.9 |
|
Juniper |
$14,003 |
50.5 |
|
Alcatel-Lucent |
$14,300 |
N/A |
|
Nortel Networks |
$5,690 |
N/A |
|
CIENA |
$2,120 |
N/A |
Data uses the latest reported numbers from Capital IQ, a division of Standard & Poor's. Keep your partners close and the competition in your vest pocket.
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