On Tuesday, Oct. 17, global technology powerhouse International Business Machines (NYSE:IBM) released Q3 2006 earnings for the period ending Sept. 30, 2006.

  • All margins continued their steady march upward, an indication of strong leadership that knows what it's doing. IBM's operations are already very efficient, but they're still getting better day by day.
  • In this age of stock-option shenanigans, it's great to see substantial share count reductions, especially from a tech company.
  • You won't find a disappointment among any of the line items that matter. Sales? Up. Profit? Up. Free cash flow? Way up. There's more cash and less debt on the balance sheet, plus the positives I mentioned above. This looks like a company at the top of its game.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$22,100

$22,617.0

$21,529.0

5.1%

Net Profit

--

$2,222.0

$1,516.0

46.6%

EPS

$1.35

$1.45

$0.94

54.3%

Diluted Shares

1534.3

1617.2

(5.1%)


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

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

41.97%

40.59%

1.38

Operating Margin

14.03%

13.54%

0.49

Net Margin

9.82%

7.04%

2.78
*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.

$10,900.0

$8,254.0

32.1%

Accounts Rec.*

$29,768.0

$26,616.0

11.8%
*Including current inventory, not broken out in the report

Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$26,374.0

$20,191.0

30.6%

Long-Term Debt

$13,436.0

$17,372.0

(22.7%)

Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

$7,300.0

$5,300.0

37.7%

Capital Expenditures

$3,400.0

$3,100.0

9.7%

Free Cash Flow

$3,900.0

$2,200.0

77.3%
Data taken from presentation slides in IBM's 8-K SEC filing.

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Related Companies:

  • Microsoft (NASDAQ:MSFT)
  • Hewlett-Packard (NYSE:HPQ)
  • General Electric (NYSE:GE)
  • Electronic Data Systems (NYSE:EDS)
  • TIBCO Software (NASDAQ:TIBX)
  • McKesson (NYSE:MCK)

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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.

At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here .