On Dec. 14, longtime software wrangler Novell (NASDAQ:NOVL) released fourth-quarter 2007 earnings for the period ended Oct. 31, 2007.

  • If you back out restructuring expenses, stock-based compensation, and one-time charges the way most analysts do, you'd get non-GAAP earnings of $20 million or $0.06 per diluted share.
  • Novell has amassed enough cash that you start to wonder what it plans to do with the riches. But don't expect it to pay back debt any time soon; Novell made $23 million off its investments this quarter, and those senior debentures with a low, low 0.5% coupon rate don't mature for another 17 years.
  • Though GAAP-style earnings are in short supply, cash flows look healthy.

(Figures in millions, except per-share data; GAAP results from continuing operations)

Income Statement Highlights

Q4 2007

Q4 2006

Change

Sales

$244.9

$233.8

4.8%

Net Profit

($17.9)

$19.9

N/A

EPS

($0.05)

$0.05

N/A

Diluted Shares

350.0

395.5

(11.5%)

Get back to basics with the income statement.

Margin Checkup

Q4 2007

Q4 2006

Change*

Gross Margin

73.6%

71.3%

2.3

Net Margin

(7.3%)

8.5%

(15.8)

       
*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2007

Q4 2006

Change

Cash + ST Invest.

$1,857.6

$1,466.3

26.7%

Accounts Rec.

$208.3

$234.0

(11%)

Liabilities

Q4 2007

Q4 2006

Change

Accounts Payable

$45.1

$44.4

1.6%

Long-Term Debt

$600

$600

0%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q4 2007

Q4 2006

Change

Cash From Ops.

$76.9

$62.3

23.5%

Capital Expenditures

$7.8

$7.1

8.8%

Free Cash Flow

$69.1

$55.1

25.4%

Owner Earnings

($10.0)

$4.4

N/A

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Microsoft (NASDAQ:MSFT)

$333,330

23.3

***

International Business Machines (NYSE:IBM)

$144,730

15.5

***

Oracle (NASDAQ:ORCL)

$109,290

25.2

****

Red Hat (NYSE:RHT)

$3,720

57.9

**

Novell

$2,460

N/A

**

Using the latest reported numbers from Capital IQ.

Keep your partners close and the competition in your vest pocket.

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