Motorola's Expensive Sales: Fool by Numbers

Fast facts the Fool way.

Anders Bylund
Anders Bylund
Jan 19, 2007 at 12:00AM
Other

On Jan. 19, mobile communications expert Motorola (NYSE:MOT) released fourth-quarter earnings for the 2006 fiscal year ending Dec. 31.

  • The bright spot in this report is the healthy revenue and market share increases -- but those achievements came at a serious cost.
  • Margins keep sliding south as Motorola grows in developing markets, where disposable income is scarce and low-end cell phones are the norm. Then again, the competition is feeling the same squeeze.
  • That $15.6 billion cash hoard is coming in handy; after the close of the reported quarter, Motorola spent more than $3.9 billion on two acquisitions in the mobile enterprise sector.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$11,792

$10,039

17.5%

Net Profit

$624

$1,202

(48.1%)

EPS

$0.24

$0.47

(48.9%)

Diluted Shares

2563.6

2559.9

0.1%

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

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

26.0%

31.6%

(5.6)

Operating Margin

6.4%

17.0%

(10.7)

Net Margin

5.3%

12.0%

(6.7)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Management Effectiveness

Q4 2006

Q4 2005

Change*

Return On Average Assets

6.6%

13.9%

(7.3)

Return On Average Equity

14.6%

29.6%

(15.1)

*Expressed in percentage points.

See how management puts its financial tools to work.

Balance Sheet Highlights


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Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$15,640

$14,785

5.8%

Accounts Rec.

$7,509

$5,652

32.9%

Inventory

$3,162

$2,422

30.6%


Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$5,056

$4,295

17.7%

Long-Term Debt

$2,704

$3,806

(29.0%)

Learn the ways of the balance sheet.

Cash Flow Highlights
Motorola didn't hand out cash flow information for the quarter beyond approximately $700 million in operation cash flow. That's down about 65% year over year, though.

Find out why Fools always follow the money.

Cash Conversion Checkup

Q4 2006

Q4 2005

Change

Days in Inventory

30.3

29.4

0.9

Days in Receivables

55.9

50.7

5.2

Days Payables Outstanding

50.9

49.1

1.7

Cash Conversion Cycle

35.4

31.0

4.4

Read up on cash conversion metrics.

Related Companies:

  • Research In Motion (NASDAQ:RIMM)
  • Nokia (NYSE:NOK)
  • Garmin (NASDAQ:GRMN)
  • Palm (NASDAQ:PALM)
  • Cisco Systems (NASDAQ:CSCO)
  • Hypercom (NYSE:HYC)

Related Foolishness:

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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, Anders Bylund had no position in any company mentioned. Fool rules are here.