On Jan. 23, 2007, scrappy semiconductor underdog Advanced Micro Devices
- Oh, my. The ATI acquisition brings in lower margins in itself, and on top of that, one-time acquisition costs are wreaking havoc with the income statement this time. Back out $550 million in integration costs, and you get $23 million in operating income, or a 1.3% pro forma operating margin.
- That massive gross margin hit is real, in any case. The price war with Intel
(NASDAQ:INTC) isn't helping, and strong new products from that bigger rival are reducing demand for AMD's high-margin, top-of-the-line server chips. - Shareholders looking for a safe haven in this storm might be comforted by a solid improvement in cash conversion metrics. Management is doing a fine job of pushing incoming funds back out the door to make more money, though that point would feel better if AMD were a retailer.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q4 2006 |
Q4 2005 |
Change |
|
|---|---|---|---|
|
Sales |
$1,773 |
$1,838 |
(3.5%) |
|
Net Profit |
($574) |
$96 |
N/A |
|
EPS |
($1.08) |
$0.21 |
N/A |
|
Diluted Shares |
531.0 |
452.3 |
17.4% |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q4 2006 |
Q4 2005 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
36.2% |
46.4% |
(10.2) |
|
Operating Margin |
(29.7%) |
11.2% |
(40.9) |
|
Net Margin |
(32.4%) |
5.2% |
(37.6) |
Margins are the earnings engine. See how they work.
Management Effectiveness
|
Q4 2006 |
Q4 2005 |
Change* |
|
|---|---|---|---|
|
Return On Assets |
(21.3%) |
5.5% |
(26.8) |
|
Return On Equity |
(42.5%) |
13.2% |
(55.7) |
See how management puts its financial tools to work.
Balance Sheet Highlights
|
Assets |
Q4 2006 |
Q4 2005 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$1,541 |
$1,795 |
(14.2%) |
|
Accounts Rec. |
$1,141 |
$806 |
41.6% |
|
Inventory |
$814 |
$389 |
109.3% |
|
Liabilities |
Q4 2006 |
Q4 2005 |
Change |
|---|---|---|---|
|
Accounts Payable |
$1,338 |
$856 |
56.3% |
|
Long-Term Debt |
$3,672 |
$1,327 |
176.7% |
Learn the ways of the balance sheet.
Cash Flow Highlights
AMD didn't give us any cash flow information at this time. Boo, hiss!
Find out why Fools follow the money whenever possible.
Cash Conversion Checkup
|
Q4 2006 |
Q4 2005 |
Change |
|
|---|---|---|---|
|
Days in Inventory |
47.0 |
53.0 |
(6.0) |
|
Days in Receivables |
42.7 |
37.2 |
5.5 |
|
Days Payables Outstanding |
81.5 |
74.7 |
6.8 |
|
Cash Conversion Cycle |
8.2 |
15.5 |
(7.3) |
Read up on cash conversion metrics.
Related Companies:
- Intel
-
NVIDIA
(NASDAQ:NVDA) -
Texas Instruments
(NYSE:TXN) -
Broadcom
(NASDAQ:BRCM) -
LSI Logic
(NYSE:LSI) -
Atheros Communications
(NASDAQ:ATHR)
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.
Atheros is a Motley Fool Hidden Gems recommendation, NVIDIA is a Stock Advisor pick, and Intel is an Inside Value selection. Find out why the chipmakers landed in different newsletters with a free 30-day trial to each service.
At the time of publication, Anders Bylund was an AMD shareholder, but had no other position in any company mentioned. Fool rules are here.
