On May 1, electronics maker Creative Technology (NASDAQ:CREAF) released earnings for the third quarter ended March 31.

  • The top line declined by 18.5% because of disappointing sales in the United States and Asia.
  • The company's new product, the ZEN Stone is a small, one-gigabyte MP3 player that will retail for $39.99 -- an obvious counter to Apple's (NASDAQ:AAPL) popular iPod Shuffle.
  • Creative carries a bottom-rung one-star rating in Motley Fool CAPS.

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

Income Statement Highlights

Q3 2007

Q3 2006

Change

Sales

$183.8

$225.7

(18.5%)

Net Profit

($23.6)

($114.3)

N/A

EPS

($0.28)

($1.38)

N/A

Diluted Shares

83.5

82.9

0.7%

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

Margin Checkup

Q3 2007

Q3 2006

Change*

Gross Margin

20.7%

(4.5%)

25.2

Operating Margin

(13.4%)

(52.4%)

39.1

Net Margin

(12.9%)

(50.7%)

37.8

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$292.5

$224.4

30.4%

Accounts Rec.

$119.2

$132.5

(10.0%)

Inventory

$153.4

$276.0

(44.4%)

Liabilities

Q3 2007

Q3 2006

Change

Accounts Payable

$51.3

$115.7

(55.7%)

The balance sheet reflects the company's health.

Cash Flow Highlights

No cash flow data -- not friendly to shareholders.

Free cash flow is a Fool's best friend.

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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. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.