Novell Surfs on Gnarly Cash Flows: Fool by Numbers
By
Anders Bylund
December 14, 2007
|
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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