Microsoft's Black Sheep Don't Matter Much: Fool by Numbers
By
Anders Bylund
January 25, 2008
|
On Jan. 24, software titan Microsoft (Nasdaq: MSFT) released second-quarter 2008 earnings for the period ending Dec. 31, 2007.
- The laggards in Microsoft's portfolio are the usual suspects: the entertainment and devices division grew sales at a tepid 3% compared to the year-ago quarter, and the online services segment doubled its loss from operations to $245 million.
- There is a silver lining for each underperformer, though. The online business reported 38% higher sales, and entertainment products like the Xbox 360 actually made a $357 million profit this time.
- All of that sort of drowns in the flood of cash that flows out of the Redmond machine, though. A 92% year-over-year EPS increase is no mean feat for a giant that juggles billions, not millions, in each hand.
(Figures in millions, except per-share data.)
Income Statement Highlights
|
Q2 2008
|
Q2 2007
|
Change
|
|
Sales
|
$16,367
|
$12,542
|
30.5%
|
|
Net Profit
|
$4,707
|
$2,626
|
79.2%
|
|
EPS
|
$0.50
|
$0.26
|
92.3%
|
|
Diluted Shares
|
9,503.0
|
9,942.0
|
(4.4%)
|
Get back to basics with the income statement.
Margin Checkup
|
Q2 2008
|
Q2 2007
|
Change*
|
|
Gross Margin
|
78.4%
|
71.1%
|
7.3
|
|
Operating Margin
|
39.6%
|
27.7%
|
11.9
|
|
Net Margin
|
28.8%
|
20.9%
|
7.9
|
*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q2 2008
|
Q2 2007
|
Change
|
|
Cash + ST Invest.
|
$21,076
|
$26,400
|
(20.2%)
|
|
Accounts Rec.
|
$11,621
|
$9,895
|
17.4%
|
|
Inventory
|
$755
|
$1,725
|
(56.2%)
|
|
Liabilities
|
Q2 2008
|
Q2 2007
|
Change
|
|
Accounts Payable
|
$3,612
|
$2,944
|
22.7%
|
|
Long-Term Debt
|
$0
|
$0
|
N/A
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q2 2008
|
Q2 2007
|
Change
|
|
Cash From Ops.
|
$4,567
|
$2,042
|
123.7%
|
|
Capital Expenditures
|
$695
|
$572
|
21.5%
|
|
Free Cash Flow
|
$3,872
|
$1,470
|
163.4%
|
|
Owner Earnings
|
$4,493
|
$2,419
|
85.7%
|
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Microsoft
|
$323,510
|
22.7
|
***
|
|
Apple (Nasdaq: AAPL)
|
$120,780
|
30.2
|
***
|
|
International Business Machines (NYSE: IBM)
|
$147,900
|
14.8
|
***
|
|
Oracle (Nasdaq: ORCL)
|
$107,920
|
23.0
|
****
|
|
Adobe Systems (Nasdaq: ADBE)
|
$20,160
|
29.0
|
****
|
Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
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