On Wednesday, Nov. 22, computer builder Dell (NASDAQ:DELL) released preliminary Q3 2007 earnings for the period ending Nov. 3, 2006. Full financial details will be provided when the company completes its SEC-mandated accounting review, and previous results may then need substantial restatements.

  • Weakish revenue growth plus moderate net margin widening plus generous share buybacks equals a respectable EPS boost. The whole is greater than the sum of the parts, you know.
  • Dell's newfound focus on pricing discipline paid off in higher gross margins, though the extra funds' path to the bottom line was anything but smooth.
  • Regardless of any corporate troubles, Dell has continued to milk the cash cow over the years. You just don't see many cash balances greater than $10 billion outside of major banking corporations.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2007

Q3 2006

Change

Sales

$14,440

$14,383

$13,911

3.4%

Net Profit

--

$677

$606

11.7%

EPS

$0.24

$0.30

$0.25

20.0%

Diluted Shares

 --

2,238

2,435

(8.1%)



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

Margin Checkup

Q3 2007

Q3 2006

Change*

Gross Margin

17.04%

16.18%

0.86

Operating Margin

5.73%

6.17%

(0.44)

Net Margin

4.71%

4.36%

0.35

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$11,600

$9,281

25.0%

Accounts Rec.

$4,350*

$4,860

(10.5%)

Inventory

$680*

$582

16.8%



Liabilities

Q3 2007

Q3 2006

Change

Accounts Payable

$10,350*

$9,376

10.4%

*These numbers were calculated from the cash conversion data Dell provided, and should be correct to within plus or minus $20 million.

Learn the ways of the balance sheet.

Cash Conversion Checkup

Q3 2007

Q3 2006

Change

Days in Inventory

5.0

4.4

0.6

Days in Receivables

33.0

30.1

2.9

Days Payables Outstanding

78.0

70.5

7.5

Cash Conversion Cycle

(40.0)

(36.0)

(4.0)



Read up on cash conversion metrics.

Cash Flow Highlights
It's hard to get upset over a missing cash flow statement when there is no proper balance sheet. But still, that hurts.

Find out why Fools always follow the money.

Related Companies:

  • Hewlett-Packard (NYSE:HPQ)
  • Gateway (NYSE:GTW)
  • Sun Microsystems (NASDAQ:SUNW)
  • IBM (NYSE:IBM)
  • Honeywell (NYSE:HON)
  • Sony (NYSE:SNE)

Related Foolishness:

Dell is both anInside Valuepickand aStock Advisorselection. Find out what piqued our fearless leaders' interest in the company with a free 30-day trial to either service -- or both.

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.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; kudos to his wife for the catchy articular title. Fool rules are here.