Cease, wild winds, O, cease to blow!
Apple-blossom, fluttering, flying,
Palely on the green turf lying,
Vanishing like winter snow;
Swift as joy to come and go.

-- "Apple-Blossom," by Mathilde Blind

On Wednesday, April 23, everybody's favorite gadget designer Apple (Nasdaq: AAPL) released second-quarter earnings for the period ending March 29, 2008.

Desktop and notebook computers are the driving forces behind the sales surge: Computer revenue grew faster than the company as a whole at 54%, year over year.

iTunes is the newly anointed king of American music sales, and it is not done with growing yet. Music-related sales improved by 35% over last year and -- perhaps more impressively -- 9% over the holiday quarter.

Margins are sliding a bit. Management explains that as a result of various product cycles and ever-changing component prices, and that sliding makes year-over-year margin comparisons "really hard to do."

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2008

Q2 2007

Change

Sales

$7,512

$5,264

42.7%

Net Profit

$1,045

$770

35.7%

EPS

$1.16

$0.87

33.3%

Diluted Shares

899.3

886.7

1.4%

Get back to basics with the income statement.

Margin Checkup

Q2 2008

Q2 2007

Change*

Gross Margin

32.9%

35.1%

(2.2)

Operating Margin

17.5%

18.7%

(1.2)

Net Margin

13.9%

14.6%

(0.7)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2008

Q2 2007

Change

Cash + ST Invest.

$19,448

$12,577

54.6%

Accounts Rec.

$1,593

$928

71.7%

Inventory

$364

$208

75.0%

Liabilities

Q2 2008

Q2 2007

Change

Accounts Payable

$4,154

$2,403

72.9%

The balance sheet reflects the company's health.

Cash Flow Highlights

Q2 2008

Q2 2007

Change

Cash From Ops.

$1,193

$734

62.5%

Capital Expenditures

$160

$105

52.4%

Free Cash Flow

$1,033

$629

64.2%

Owner Earnings

$1,014

$734

38.1%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap
(billions)

Trailing
P/E Ratio

CAPS Rating

Microsoft (Nasdaq: MSFT)

$293.4

17.1

***

Apple

$142.6

35.6

****

Dell (Nasdaq: DELL)

$38.6

14.4

**

Adobe Systems (Nasdaq: ADBE)

$19.4

26.9

****

Netflix (Nasdaq: NFLX)

$2.0

33.2

***

Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.

Related Foolishness:

Fool by Numbers provides raw earnings information in a timely, convenient package. But because numbers never give the whole story, check Fool.com for in-depth discussion of the meaning behind the earnings.

Dell and Microsoft are Motley Fool Inside Value recommendations, and Apple, Dell, and Netflix are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters for 30 days, free.

At the time of publication, Anders Bylund was a Netflix shareholder but had no position in any other company mentioned. Fool rules are here.