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) |
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% |
|
$1,014 |
$734 |
38.1% |
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap |
Trailing |
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.
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