"Writing poems about writing poems
is like rolling bales of hay in Texas.
Nothing but the horizon to stop you."

-- Ruth Stone, "Always on the Train"

On April 23, broad-line semiconductor maker Texas Instruments (NYSE:TXN) released first-quarter earnings for the period ending March 31. The passage of time is putting an end to National Poetry Month soon, but will TI's bales of hay keep on rolling?

  • The numbers don't look so hot, so why the 8% jump in the stock price today? Management comments point to a rebound from the current six-month semiconductor slump, that's why.
  • The relatively stable margins in the face of slower sales is a benefit of TI's hybrid of in-house manufacturing and outsourcing to foundries such as United Microelectronics (NYSE:UMC) and Semiconductor Manufacturing International (NYSE:SMI).
  • Cash flows and owner earnings are moving in the right direction already, though it's partly the result of lower reinvestment into the business than last year. But cash is cash, and this is another tribute to a flexible business model.

(Figures in millions, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$3,191

$3,334

(4.3%)

Net Profit

$516

$585

(11.8%)

EPS

$0.35

$0.36

(2.8%)

Diluted Shares

1470

1618

(9.1%)

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

51.3%

50.2%

1.2

Operating Margin

21.3%

21.5%

(0.2)

Net Margin

16.2%

17.6%

(1.4)
*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$3,336

$3,664

(9%)

Accounts Rec.

$1,756

$1,798

(2.3%)

Inventory

$1,409

$1,246

13.1%

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$550

$720

(23.6%)

Long-Term Debt

$0

$318

N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$554

$522

6.1%

Capital Expenditures

$179

$404

(55.7%)

Free Cash Flow

$375

$118

217.8%

Owner Earnings

$628

$497

26.4%

Free cash flow is a Fool's best friend.

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.

What do other investors think of TI? Take a peek at Motley Fool CAPS, where everyday investors just like you have ranked this company along with thousands of others. You can join the discussion for free!

At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.