On Jan. 25, mobile software expert Openwave Systems
- Revenue growth has turned to revenue shrinkage. Combined with lower gross margins and massive dilution, returns to the common shareholder look horrendous.
- The liquid assets are shrinking fast. If the company can't turn a profit sometime soon, management may well need to raise additional funds for its day-to-day operations before the end of the year. There's already plenty of debt and dilution to contend with, though investment interest is outweighing the interest on loan payments today.
- It is nice to have an official earnings release rather than the usual "preliminary results" report, though. Openwave's review of past stock option granting practices cost the company $750,000 in the second quarter and $5.5 million in the first, and delayed SEC filings for months. The audit found a few misstated grants, but the committee said there was no proof of any intentional wrongdoing.
(Figures in thousands, except per-share data)
Income Statement Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$84,160 |
$104,488 |
(19.5%) |
|
Net Profit |
-$15,788 |
$8,444 |
N/A |
|
EPS |
($0.17) |
$0.11 |
N/A |
|
Diluted Shares |
93,352 |
79,433 |
17.5% |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
58.4% |
69.9% |
(11.5) |
|
Operating Margin |
-24.6% |
9.0% |
(33.6) |
|
Net Margin |
-18.8% |
8.1% |
(26.8) |
Margins are the earnings engine. See how they work.
Management Effectiveness
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Return On Assets |
-7.0% |
12.0% |
(19.0) |
|
Return On Equity |
-12.2% |
10.2% |
(22.4) |
See how management puts its financial tools to work.
Balance Sheet Highlights
|
Assets |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$393,067 |
$542,971 |
(27.6%) |
|
Accounts Rec. |
$149,043 |
$138,729 |
7.4% |
|
Liabilities |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$11,468 |
$12,410 |
(7.6%) |
|
Long-Term Debt |
$148,605 |
$147,780 |
0.6% |
Learn the ways of the balance sheet.
Cash Flow Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
-$10,741.0 |
$8,957.0 |
N/A |
|
Capital Expenditures |
-$1,503.0 |
$2,686.0 |
N/A |
|
Free Cash Flow |
-$9,238.0 |
$6,271.0 |
N/A |
Find out why Fools always follow the money.
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Related Foolishness:
- Proxy Battle Over Openwave Board Seats
- Won't Someone Please Think of the Children!
- Openwave Pulled Under
Openwave is one of David Gardner's Rule Breakers. Sneak a peek at tomorrow's massive growth today with a free 30-day trial pass to Motley Fool Rule Breakers.
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, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here.
