Blackboard Chalks Up a Loss: Fool by Numbers

On Aug. 8, Blackboard (Nasdaq: BBBB  ) released Q2 2006 earnings for the period ending June 30.

• Revenues increased 32%, beating analyst estimates.
• Margins suffered across the board, and the bottom line swung from a $0.21-per-share profit the prior year to a loss of $0.23 per share for Q2 2006.
• Continued integration of the Web CT acquisition sent free cash flow even deeper into negative territory.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Avg. Est.	Q2 2006	Q2 2005	Change
Sales	$42,150	$43,580	$33,049	31.9%
Net Profit	--	($6,311)	$6,063	N/A
EPS	($0.23)	($0.23)	$0.21	N/A
Diluted Shares	--	27,777	28,201	(1.5%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q2 2006	Q2 2005	Change*
Gross Margin	67.16%	70.81%	(3.65)
Operating Margin	(18.99%)	17.42%	(36.41)
Net Margin	(14.48%)	18.35%	(32.83)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q2 2006	Q2 2005	Change
Cash + ST Invest.	$27,620	$99,696	(72.3%)
Accounts Rec.	$57,060	$38,719	47.4%
Inventory	$2,851	$2,507	13.7%

Liabilities	Q2 2006	Q2 2005	Change
Accounts Payable	$1,977	$1,811	9.2%
Long-Term Debt	$56,867	$27	210,519%

Learn the ways of the balance sheet.

Cash Flow Highlights

	Q2 2006	Q2 2005	Change
Cash From Ops.	($13,871)	$1,085	N/A
Capital Expenditures	$5,741	$4,774	20.3%
Free Cash Flow	($19,612)	($3,689)	N/A

Find out why Fools always follow the money.

Related Companies:

• eCollege (Nasdaq: ECLG  )
• Microsoft (Nasdaq: MSFT  )
• Oracle (Nasdaq: ORCL  )
• Apple (Nasdaq: AAPL  )

Blackboard is aMotley Fool Hidden Gemsrecommendation. A free trial will let you find out why the stock is up more than 52% since it was first recommended in June 2005.

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 check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Seth Jayson had shares of Blackboard and Microsoft but no positions in any other company mentioned. Microsoft is a Motley Fool Inside Value recommendation. Fool rules are here.