Keynote's Q4 Off-Key: Fool by Numbers

On Nov. 2, Keynote Systems (Nasdaq: KEYN  ) released earnings for its 2005 fourth quarter, which ended Sept. 30.

• Net income and EPS benefited from a $2.7 million tax credit from the partial recognition of a deferred tax asset. Without it, EPS would have been $0.08 per stub, still ahead of Wall Street estimates.
• Management says it bought back 2 million shares from March to October. (Find out why buybacks aren't always a good thing by clicking here.)
• Keynote expects to book between $13.3 million and $13.7 million in sales and $0.01 and $0.03 in per-share earnings during the first quarter of fiscal 2006. That's well below Street expectations of $13.83 million and $0.08 per stub. Bummer.

Figures in thousands, except per-share data

Income Statement Highlights (What's this?)

	Avg. Est.	Q4 2005	Q4 2004	% Change
Sales	$13,630	$13,474	$12,147	10.9%
Net Profit	--	$4,342	$1,317	229.7%
EPS	$0.07	$0.21	$0.06	250%

Margin Checkup(What's this?)

	Q4 2005	Q4 2004	Change
Gross Margin	73.38%	75.20%	-1.82%
Op. Margin	5.98%	3.30%	2.68%
Net Margin	32.23%	10.84%	21.38%

Balance Sheet Highlights(What's this?)

Assets	Q4 2005	Q4 2004	% Change
Cash + ST Invest.	$133,803	$148,117	-9.7%
Inventory	$-	$-	N/A
Accounts Rec.	$6,387	$6,138	4.1%

Liabilities	Q4 2005	Q4 2004	% Change
Capital Leases	$67	$115	-41.7%
Accounts Pay.	$538	$1,692	-68.2%

Cash Flow Highlights*(What's this?)

	Q4 2005	Q4 2004	% Change
Cash From Ops	$3,562	$3,016	18.1%
Capital Expend.	$1,179	$2,334	-49.5%
Free Cash Flow	$2,383	$682	249.4%

*Cash flow data is for the three months ending Sept. 30, 2005.

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Related Foolishness:

• The Keynote just won't turn.
• Keynote had a marginal fiscal year.
• Were you there when Stock Advisor recommendation Amazon (Nasdaq: AMZN  ) blacked out? Keynote was.
• Keynote's Web performance data says travel agents are flying high on the Web.
• The company has been cash-rich for more than two years now.

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 checkFool.comfor more of our in-depth discussion of what the numbers mean.

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Fool contributorTim Beyersowns shares of Akamai, aRule Breakersrecommendation. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.