On Oct. 26, Microsoft (NASDAQ:MSFT) released Q1 2007 earnings for the period ended Sept. 30, 2006.

  • A revenue increase of 11% and net profit growth of 10.7% surprised Mr. Market.
  • The diluted share count dropped 7.1%.
  • Margins dropped across the board.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q1 2007

Q1 2006

Change

Sales

$10,750

$10,811

$9,741

11.0%

Net Profit

--

$3,478

$3,141

10.7%

EPS

$0.31

$0.35

$0.29

20.7%

Diluted Shares

10,010

10,772

(7.1%)



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

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

84.31%

87.14%

(2.83)

Operating Margin

41.38%

45.24%

(3.86)

Net Margin

32.17%

32.25%

(0.08)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$31,832

$40,056

(20.5%)

Accounts Rec.

$6,879

$5,799

18.6%

Inventory

$2,068

$726

184.8%



Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$2,406

$1,852

29.9%

Long-Term Debt

$0

$0

N/A



Learn the ways of the balance sheet.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$4,061

$4,329

(6.2%)

Capital Expenditures

$411

$213

93.0%

Free Cash Flow

$3,650

$4,116

(11.3%)



Find out why Fools always follow the money.

Related Companies:

  • IBM (NYSE:IBM)
  • Google (NASDAQ:GOOG)
  • Yahoo! (NASDAQ:YHOO)
  • Red Hat (NASDAQ:RHAT)
  • Sony (NYSE:SNE)

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, Seth Jayson was long Microsoft common and calls but had no position in any other company mentioned. Microsoft is a Motley Fool Inside Value recommendation. Yahoo! is a Motley Fool Stock Advisor pick. See what investors are saying about Microsoft at Motley Fool CAPS. Fool rules are here.