On Oct. 4, mobile gadget master Research In Motion (NASDAQ:RIMM) released second-quarter 2008 earnings for the period ended Sept. 1.

  • These brilliant results only look more impressive when you consider that RIM wasn't reliably profitable as recently as last year. It's the fourth quarter in a row of ever-faster revenue growth for the Canadians.
  • Inventories are growing slower than revenues, meaning that RIM has little trouble pushing its products out the door.
  • The strongest growth of all comes in Tom Gardner's favorite cash flow metric: owner earnings. That's a sign of strong operations, as opposed to shrewd investments or fancy footwork in the tax-man tango.
  • Palm (NASDAQ:PALM) just showed some weakness, but RIM is doing just fine. We'll see which is the better sector indicator when Nokia (NYSE:NOK) and Apple (NASDAQ:AAPL) report earnings in the coming weeks.

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2008

Q2 2007

Change

Sales

$1,372

$659

108.4%

Net Profit

$288

$140

105.3%

EPS*

$0.50

$0.25

100%

Diluted Shares

572.2

570.7

0.3%

*Adjusted for the recent 3-for-1 share split.

Get back to basics with the income statement.

Margin Checkup

Q2 2008

Q2 2007

Change*

Gross Margin

51.3%

56.2%

(4.9)

Operating Margin

28.6%

27.3%

1.4

Net Margin

21%

21.3%

(0.3)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2008

Q2 2007

Change

Cash + ST Invest.

$1,342

$697

92.4%

Accounts Rec.

$853

$377

126.4%

Inventory

$301

$196

54%

Liabilities

Q2 2008

Q2 2007

Change

Accounts Payable

$182

$121

50.7%

Long-Term Debt

$6.9

$6.9

0.1%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q2 2008

Q2 2007

Change

Cash From Ops.

$227

$251

(9.4%)

Capital Expenditures

$79.0

$68.6

15.1%

Free Cash Flow

$148

$182

(18.6%)

Owner Earnings

$250

$102

144.8%

Free cash flow is a Fool's best friend.

Related Foolishness:

Palm is a Stock Advisor recommendation. You can try this market-beating publication free for 30 days.

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.