On June 6, Nortel (NYSE:NT) released Q1 2006 earnings for the period ended March 31. The short story:

  • Revenues flat.
  • Margins in the dumper.
  • Free cash burn less bad than last year, but how exciting is that?

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q1 2006

Q1 2005

Change

Sales

$2,540

$2,382

$2,389

(0.3%)

Net Profit

--

($167)

($104)

N/A

EPS

($0.01)

($0.04)

($0.02)

N/A

Diluted Shares

4,339

4,338

0.0%



Get back to basics with a look at the income statement.

Margin Checkup

Q1 2006

Q1 2005

Change*

Gross Margin

38.12%

42.36%

(4.24)

Operating Margin

(6.68%)

(3.26%)

(3.42)

Net Margin

(7.01%)

(4.35%)

(2.66)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q1 2006

Q1 2005

Change

Cash + ST Invest.

$2,695

$3,430

(21.4%)

Accounts Rec.

$2,620

$2,624

(0.2%)

Inventory

$1,984

$1,974

0.5%



Liabilities

Q1 2006

Q1 2005

Change

Accounts Payable

$1,069

$974

9.8%

Long-Term Debt

$2,445

$2,566

(4.7%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q1 2006

Q1 2005

Change

Cash From Ops.

($174)

($263)

N/A

Capital Expenditures

$99

$54

83.3%

Free Cash Flow

($273)

($317)

N/A



Find out why Fools always follow the money.

Related companies:

  • Juniper Networks (NASDAQ:JNPR)
  • Avaya (NYSE:AV)
  • Cisco (NASDAQ:CSCO)

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.

At the time of publication, Seth Jayson had no positions in any company mentioned here. Fool rules are here.