Springtime Apple Blossoms: Fool by Numbers

Cease, wild winds, O, cease to blow!
Apple-blossom, fluttering, flying,
Palely on the green turf lying,
Vanishing like winter snow;
Swift as joy to come and go.

-- "Apple-Blossom," by Mathilde Blind

On Wednesday, April 23, everybody's favorite gadget designer Apple (Nasdaq: AAPL  ) released second-quarter earnings for the period ending March 29, 2008.

Desktop and notebook computers are the driving forces behind the sales surge: Computer revenue grew faster than the company as a whole at 54%, year over year.

iTunes is the newly anointed king of American music sales, and it is not done with growing yet. Music-related sales improved by 35% over last year and -- perhaps more impressively -- 9% over the holiday quarter.

Margins are sliding a bit. Management explains that as a result of various product cycles and ever-changing component prices, and that sliding makes year-over-year margin comparisons "really hard to do."

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2008

Q2 2007

Change

Sales

$7,512

$5,264

42.7%

Net Profit

$1,045

$770

35.7%

EPS

$1.16

$0.87

33.3%

Diluted Shares

899.3

886.7

1.4%

Get back to basics with the income statement.

Margin Checkup

Q2 2008

Q2 2007

Change*

Gross Margin

32.9%

35.1%

(2.2)

Operating Margin

17.5%

18.7%

(1.2)

Net Margin

13.9%

14.6%

(0.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2008

Q2 2007

Change

Cash + ST Invest.

$19,448

$12,577

54.6%

Accounts Rec.

$1,593

$928

71.7%

Inventory

$364

$208

75.0%

Liabilities

Q2 2008

Q2 2007

Change

Accounts Payable

$4,154

$2,403

72.9%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q2 2008

Q2 2007

Change

Cash From Ops.

$1,193

$734

62.5%

Capital Expenditures

$160

$105

52.4%

Free Cash Flow

$1,033

$629

64.2%

Owner Earnings

$1,014

$734

38.1%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap
(billions)

Trailing
P/E Ratio

CAPS Rating

Microsoft (Nasdaq: MSFT  )

$293.4

17.1

***

Apple

$142.6

35.6

****

Dell (Nasdaq: DELL  )

$38.6

14.4

**

Adobe Systems (Nasdaq: ADBE  )

$19.4

26.9

****

Netflix (Nasdaq: NFLX  )

$2.0

33.2

***

Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.

Related Foolishness:


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