On Jan. 23, wireless technology company Qualcomm (Nasdaq: QCOM) released earnings for the first quarter ended Dec. 30.

  • The newfound growth comes from mobile networks and handset makers worldwide getting used to the idea of high-speed 3G connectivity based on Qualcomm's WCDMA technology. The 3G line of products and services is the company's bread and butter these days.
  • The 11.5% increase in operating cash flow, plus massively lower capital investments, equals lots of beautiful free cash flowing to and fro.
  • This is a mediocre three-star stock in Motley Fool CAPS right now. Do these results merit a higher rating -- or perhaps a lower one? Share your opinion right now. It's fun, it's free, and we're all helping one another become better investors.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q1 2008

Q1 2007

Change

Sales

$2,440

$2,019

20.9%

Net Profit

$767

$648

18.4%

EPS

$0.46

$0.38

21.1%

Diluted Shares

1,664

1,685

(1.2%)

Get back to basics with the income statement.

Margin Checkup

Q1 2008

Q1 2007

Change*

Gross Margin

67.9%

68.6%

(0.7)

Operating Margin

31.0%

28.5%

2.5

Net Margin

31.4%

32.1%

(0.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2008

Q1 2007

Change

Cash + ST Invest.

$7,068

$5,947

18.8%

Accounts Rec.

$703

$693

1.4%

Inventory

$522

$330

58.2%

Liabilities

Q1 2008

Q1 2007

Change

Accounts Payable

$536

$471

13.8%

Long-Term Debt

$0

$0

N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2008

Q1 2007

Change

Cash From Ops.

$880

$789

11.5%

Capital Expenditures

$127

$322

(60.6%)

Free Cash Flow

$753

$467

61.2%

Owner Earnings

$748

$417

79.4%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Nokia (NYSE: NOK)

$124.3

13.3

****

Qualcomm

$59.9

18.8

***

Texas Instruments (NYSE: TXN)

$42.4

17.3

****

Broadcom (Nasdaq: BRCM)

$11.4

73.3

***

Alcatel-Lucent (NYSE: ALU)

$13.4

N/A

**

Using the latest reported numbers from Capital IQ.

Keep your partners close and the competition in your vest pocket.

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