On Oct. 18, underdog chip maker Advanced Micro Devices (NYSE:AMD) released Q3 2006 earnings for the period ended Oct. 1, 2006.

  • Excluding memory operations from last year, which were spun off into Spansion (NASDAQ:SPSN) three quarters ago, sales spiked up followed by an even higher profit jump. Heavy dilution, mostly in the form of stock-based compensation, took the edge off these gains in earnings per share, however.
  • Gross margins took a hit from operational issues and the Intel (NASDAQ:INTC) price war. Management expects to rebound about 2 percentage points on righting the operational ship, though pricing is largely out of the company's hands.
  • Heavy demand and the aforementioned operational issues drained inventories this quarter. AMD is no retailer, but it does track cash conversion metrics, and most retailers would kill for a negative conversion cycle total.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005*

Change

Sales

$1,310

$1,327.6

$1,010.00

31.4%

Net Profit

--

$134.5

$76.00

76.9%

EPS

$0.24

$0.27

$0.17

58.8%

Diluted Shares

496.8

443.70

12%
*Figures exclude contribution from memory operations because of the Spansion spinoff in the interceding year.

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

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

51.40%

55.40%

(4.00)

Operating Margin

8.98%

12.77%

(3.79)

Net Margin

10.13%

7.52%

2.61

*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.

$2,356.9

$1,342.2

75.6%

Accounts Rec.

$688.0

$657.4

4.7%

Inventory

$465.7

$931.8

(50.0%)

Liabilities

Q3 2006

Q3 2005*

Change

Accounts Payable

$901.3

$901.7

(0%)

Long-Term Debt

$644.4

$1,708.9

(62.3%)

*Again, figures exclude Spansion assets.

Learn the ways of the balance sheet.

Cash Flow Highlights

AMD did not provide any cash flow data at this time. Boo! Hiss!

Find out why Fools always follow the money.

Cash Conversion Checkup

Q3 2006

Q3 2005*

Change

Days in Inventory

60.7

139.1

(78.4)

Days in Receivables

42.7

54.0

(11.3)

Days Payables Outstanding

109.1

117.6

(8.6)

Cash Conversion Cycle

(5.6)

75.5

(81.2)

*You know the drill -- no Spansion-related data included.

Read up on cash conversion metrics.

Related Companies:

  • Intel
  • Spansion
  • Hitachi (NYSE:HIT)
  • Koninklijke Philips (NYSE:PHG)
  • Freescale Semiconductor (NYSE:FSL)
  • NVIDIA (NASDAQ:NVDA)

Related Foolishness:

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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 checkFool.comfor more of our in-depth discussion of what the numbers mean.

At the time of publication,Anders Bylund had positions in none of these companies. The Motley Fool is investors writing for investors.