On Aug. 7, networking mastodon Cisco Systems
- It's another predictably great quarter with strong sales and profit growth, stable income margins, and more cash generation than GAAP profits.
- Few companies other than large banks can claim to have more cash than Microsoft
(NASDAQ:MSFT) , but Cisco is one of them. Heck, the company is making a run at ExxonMobil(NYSE:XOM) and its $30 billion cash-on-hand balance. Net of debt, Microsoft is the only non-financial U.S. company that can match Cisco*. So what is the plan for all that moola? - You might expect inventory levels to rise about as quickly as revenues, but you'd be wrong this time. Most of the inventory components did behave as expected, except work in process which dipped from $377 million a year ago to only $45 million today. That's on purpose, and the effect of moving to a "lean manufacturing model" to speed up inventory turns.
*Says a Capital IQ screen for $16 billion or more in cash minus long-term debt, excluding the financial sector. Only two results, match.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q4 2007 |
Q4 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$9,433 |
$7,984 |
18.1% |
|
Net Profit |
$1,930 |
$1,544 |
25% |
|
EPS |
$0.31 |
$0.25 |
24% |
|
Diluted Shares |
6,275 |
6,187 |
1.4% |
Get back to basics with the income statement.
Margin Checkup
|
Q4 2007 |
Q4 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
64.3% |
64.4% |
(0.1) |
|
Operating Margin |
24.4% |
24.9% |
(0.5) |
|
Net Margin |
20.5% |
19.3% |
1.1 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q4 2007 |
Q4 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$22,266 |
$17,814 |
25% |
|
Accounts Rec. |
$3,989 |
$3,303 |
20.8% |
|
Inventory |
$1,322 |
$1,371 |
(3.6%) |
|
Liabilities |
Q4 2007 |
Q4 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$786 |
$880 |
(10.7%) |
|
Long-Term Debt |
$6,408 |
$6,332 |
1.2% |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q4 2007 |
Q4 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$2,738 |
$2,317 |
18.2% |
|
Capital Expenditures |
$339 |
$177 |
91.5% |
|
Free Cash Flow |
$2,399 |
$2,140 |
12.1% |
|
$2,263 |
$1,804 |
25.4% |
Free cash flow is a Fool's best friend.
Related Foolishness:
- 5 More Undervalued Stocks Getting Bought Back
- Color to the Numbers: Top Cash Cow Stocks
- Foolish Fundamentals: Inventory
Microsoft is a Motley Fool Inside Value recommendation. Learn how to buy a $20 wallet with $50 inside at the capable hands of Philip Durell and his value hounds, absolutely free for 30 days.
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, Fool contributor Anders Bylund had no position in any company mentioned, but he wanted to. Fool rules are here, and they're keeping him from buying what he talks about all the time.
