On Thursday, Motley Fool Rule Breakers pick AkamaiTechnologies (NASDAQ:AKAM) released third-quarter 2006 earnings for the period ended Sept. 30, 2006.

  • Net income appeared to take a huge hit, but the comparable drop was due to a $256 million one-time tax benefit issued during last year's Q3. As a result, Akamai has close to $300 million in credits that substitute for cash in paying taxes. It's likely they'll be available for several years, which should protect the firm's ample cash flow.

  • After accounting for the tax credit, amortization of intangibles, equity-based compensation, and other special items, Akamai's $0.24 in per-share earnings easily bested targets. Sales, too, came in above expectations.

  • It wasn't immediately clear whether Akamai altered full-year guidance. Earlier, management had said to expect per-share earnings of $0.83 on $415 million in 2006 sales.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$108,790

$111,495

$75,713

47.3%

Net Profit

--

$14,019

$272,260

(94.9%)

EPS

$0.22

$0.08

$1.71

(95.3%)

Diluted Shares

--

177,063

160,362

10.4%



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

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

77.59%

79.80%

(2.21)

Operating Margin

19.52%

24.83%

(5.31)

Net Margin

12.57%

359.59%

(347.02)

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$276,654

$67,046

312.6%

Accounts Rec.

$67,375

$43,935

53.4%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$73,322

$50,982

43.8%

Long-Term Debt

$200,000

$200,000

0%



Learn the ways of the balance sheet.

Cash Flow Checkup

Q3 2006

Q3 2005

Change

Cash From Ops.

$48,490

$19,499

148.7%

Capital Expenditures

$16,451

$8,531

92.8%

Free Cash Flow

$32,039

$10,968

192.1%



Find out why Fools always follow the money.

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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.

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Fool contributor Tim Beyers owns shares of Akamai. You can find out which other stocks he owns by checking Tim's Fool profile. The Motley Fool's disclosure policy always adds up.