IBM Is Awesome Where It Counts: Fool by Numbers
By Anders Bylund
January 18, 2008
Recommended (1)
On Jan. 17, IBM (NYSE: IBM) released earnings for the fiscal year ended Dec. 31, 2007.
- We already knew what the sales and earnings would look like after the preannouncement earlier this week. While that was a tasty starter, the details are really quite delicious.
- Here's a scrumptious chain of events for you: Sales growth easily outpaced inflation, but net profits ballooned even faster. Combined with a generous share buyback program, earnings per share virtually exploded. Still, free cash flow nearly managed to match the EPS gains.
- The world outside U.S. borders generated 65% of IBM's revenue, but 75% of its operational profits. There's greater-than-10% revenue growth happening in places like Poland, Pakistan, Portugal, and Paraguay.
(Figures in millions, except per-share data)
Income Statement Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Sales
|
$98,786
|
$91,424
|
8.1%
|
|
Net Profit
|
$10,418
|
$9,492
|
9.8%
|
|
EPS
|
$7.18
|
$6.11
|
17.5%
|
|
Diluted Shares
|
1,451
|
1,554
|
(6.6%)
|
Get back to basics with the income statement.
Margin Checkup
|
FY 2007
|
FY 2006
|
Change*
|
|
Gross Margin
|
42.2%
|
41.9%
|
0.4
|
|
Operating Margin
|
14.7%
|
14.6%
|
0.1
|
|
Net Margin
|
10.5%
|
10.3%
|
0.2
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
FY 2007
|
FY 2006
|
Change
|
|
Cash + ST Invest.
|
$16,146
|
$10,657
|
51.5%
|
|
Other short-term assets
|
$37,031
|
$34,003
|
8.9%
|
|
Liabilities
|
FY 2007
|
FY 2006
|
Change
|
|
Short-term liabilities
|
$32,076
|
$31,189
|
2.8%
|
|
Long-Term Debt
|
$19,539
|
$13,780
|
41.8%
|
The balance sheet reflects the company's health. IBM chose to report some of their balances in a non-standard, lumped-together format.
Cash Flow Highlights
|
FY 2007
|
FY 2006
|
Change
|
|
Cash From Ops.
|
$17,400
|
$15,307
|
13.7%
|
|
Capital Expenditures
|
$5,000
|
$4,700
|
6.4%
|
|
Free Cash Flow
|
$12,400
|
$10,607
|
16.9%
|
|
Owner Earnings
|
$11,918
|
$10,075
|
18.3%
|
Free cash flow is a Fool's best friend. Many of the cash flow figures come from the earnings call, where management handed out nice, round numbers. Owner earnings were calculated from reported financial items.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Microsoft (Nasdaq: MSFT)
|
$315,610
|
22.1
|
***
|
|
IBM
|
$143,790
|
15.4
|
***
|
|
Hewlett-Packard (NYSE: HPQ)
|
$112,990
|
16.4
|
****
|
|
Oracle (Nasdaq: ORCL)
|
$111,260
|
23.7
|
****
|
|
EMC (NYSE: EMC)
|
$36,130
|
24.3
|
*****
|
Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
Related Foolishness:
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.
Get the best of the Fool delivered to your inbox every Friday
Terms & Conditions
RSS Headlines
Fool UK