Three days of selling on Wall Street. Three days of buying at IPG Photonics (NASDAQ:IPGP). Could the contrast be any starker?

Early Tuesday morning, the laser-maker and Motley Fool Rule Breakers recommendation reported earnings that totally outclassed even the strong numbers reported a day later by Motley Fool Hidden Gems recommendation-and-also-laser-maker Rofin-Sinar (NASDAQ:RSTI). (That's right, folks. At the Fool, two of our newsletters are backing rivals in a laser gunfight. Personally, I intend to keep my head down.)

Sales for the fiscal third quarter improved 32% year over year at IPG. Even better, improved margins on those sales helped the company turn those sales gains into 80% improvement in net income. Nice. Better still, the company has maintained this pace all year long -- for the first nine months of fiscal 2007, sales are up a similar 32%, and net income is up 71%.

But the news wasn't all good.

The bad news
One of the few dark spots in the firm's income statement is that not all of the spoils went to the victorious shareholders. Thanks to a (weighted average) share count that has ballooned 38% over the past year, profits at the per-share level grew a less impressive 58% for the third quarter, 52% year-to-date.

Further disappointment could be found on the balance sheet, however. There we learned that accounts receivable increased 48% in comparison to this time last year. Meanwhile, inventories are up 46%. In each case, these cash-draining line items are growing faster than sales.

You know where I'm going with this. That's right, I'm going to talk about cash flow -- or rather, the total absence thereof. When a firm ties up its cash in uncollected bills and unsold inventory, that's bound to depress cash profits. IPG released its cash flow statement upon filing its 10-Q with the SEC today; so far this year, IPG hasn't generated a penny's worth of cash profit. On the contrary, free cash flow ran to negative $27 million -- far worse than the $4.6 million IPG burned through in the first three quarters of last year.

With nearly $45 million in the bank, IPG won't run out of cash anytime soon. Still, if I might suggest a word of advice: Next quarter, this company might want to consider doing a little less laser-building and a little more bill-collecting.

Do the hypergrowth hunters at Motley Fool Rule Breakers agree with Rich's rant, or do they see method to IPG's madness? Tune in to their take on the quarter's news when you accept a free trial of the service.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.