On Feb. 7, News Corp. (NYSE:NWS) released second-quarter earnings for the period ended Dec. 31.

  • The 2.8% decrease in outstanding shares turned an 18.4% increase in continuing operations into a 24% jump in EPS.
  • Revenue and earnings growth were driven higher by substantial gains in filmed entertainment, cable network programming, and newspaper advertising and circulation.
  • The company announced a share exchange agreement with Liberty Media which will result in News Corp.'s acquiring Liberty's 16.3% economic interest in the company. Chairman and CEO Rupert Murdoch stated that "... we believe [the transaction] unlocks tremendous value for our shareholders. It will be immediately accretive on both a free cash flow and earnings per share basis, and it allows us to monetize our stake in DIRECTV at an attractive valuation, tax free."
  • More than 95% of Motley Fool CAPS users expect News Corp. to outperform the S&P 500.

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Sales

$7,844

$6,665

17.7%

Net Profit*

$822

$694

18.4%

EPS

$0.26

$0.21

23.8%

Diluted Shares

3,187

3,280

(2.8%)

*Reflects income from continuing operations.

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

Margin Checkup

Q2 2007

Q2 2006

Change*

Gross Margin

32.0%

32.9%

(0.9)

Operating Margin

14.6%

13.8%

0.8

Net Margin

10.5%

10.4%

0.1

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash + ST Invest.

$5,438

$5,243

3.7%

Accounts Rec.

$6,339

$5,433

16.7%

Inventory

$2,241

$1,917

16.9%



Liabilities

Q2 2007

Q2 2006

Change

Accounts Payable*

$4,480

$3,956

13.2%

Long-Term Debt

$11,431

$11,260

1.5%

*Accounts payable include accrued expenses and other liabilities.

Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2007

YTD 2006

Change

Cash From Ops.

$705

$461

52.9%

Capital Expenditures*

$900

$1,988

(54.7%)

Free Cash Flow

($195)

($1,527)

N/A

*Capital expenditures include expenditures on acquisition.

Find out why Fools always follow the money.

Related Companies:

  • Time Warner (NYSE:TWX)
  • Walt Disney (NYSE:DIS)
  • McGraw-Hill (NYSE:MHP)

Related Foolishness:

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