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.
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