On Tuesday, Sept. 5, optical network maven Finisar (NASDAQ:FNSR) released Q1 2007 earnings for the period ended July 31, 2006.

  • Margins are moving in the right direction, but the company is still operating in the red on the bottom line.
  • Inventory growth is roughly tracking sales growth, but divergence in the accounts payable and receivable items growth rates suggests that the company is having a hard time collecting payments from its customers in a timely manner.
  • It's hard to complain too much about 12.6% share dilution when the stock trades nearly three times higher today than it did a year ago. Still, some discipline here would be great.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q1 2006

Q1 2005

Change

Sales

$107

$106

$82

30%

Net Profit

--

($1)

($19)

N/A

EPS

$0.03

$0.00

($0.07)

N/A

Diluted Shares

306

272

12.6%

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

Margin Checkup

Q1 2006

Q1 2005

Change*

Gross Margin

32.73%

25.62%

7.11

Operating Margin

4.11%

(17.59%)

21.70

Net Margin

(0.77%)

(23.35%)

22.58
*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.

$108

$102

5.7%

Accounts Rec.

$75

$43

73.8%

Inventory

$52

$37

39.9%

Liabilities

Q1 2006

Q1 2005

Change

Accounts Payable

$36

$33

8.2%

Long-Term Debt

$239

$247

(3.1%)

Learn the ways of the balance sheet.

Cash Flow Highlights
The company neglected to provide this important information in its report. Back to the drawing board ...

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At the time of publication, Fool contributor Anders Bylund had positions in none of the companies mentioned. Fool rules are here .