On Nov. 29, Dell (NASDAQ:DELL) released third-quarter 2008 earnings for the period ended Nov. 2, 2007.

  • At first glance, it's hard to complain about 9% revenue growth and even better profit improvements in this hesitant economic environment -- but then you have to remember that HP is on an annual sales growth tear of about 14% now, and Apple (NASDAQ:AAPL) is strutting a 24% revenue boost.
  • The geographical revenue mix is shifting around just a bit -- sales in the Americas clocked in 5% above the year-ago result, while the rest of the world wanted 13% more Dell products this time.
  • The product mix isn't static, either. Servers and storage systems are in high demand, along with notebook computers. However, desktop sales are actually on the decline.
  • Dell used to buy back upward of $1 billion worth of its own stock frequently, but turned off that faucet entirely about a year ago. With SEC investigations and restatements in the rearview mirror, the company plans to start buying shares again this December.

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

Income Statement Highlights

Q3 2008

Q3 2007

Change

Sales

$15,646

$14,419

8.5%

Net Profit

$766

$601

27.5%

EPS

$0.34

$0.27

25.9%

Diluted Shares

2,266

2,238

1.3%

Get back to basics with the income statement.

Margin Checkup

Q3 2008

Q3 2007

Change*

Gross Margin

18.5%

16.6%

1.9

Operating Margin

5.3%

5.1%

0.2

Net Margin

4.9%

4.2%

0.7

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q3 2008

Q3 2007

Change

Cash + ST Invest.

$12,605

$9,318

35.3%

Accounts Rec.

$7,716

$6,333

21.8%

Inventory

$1,102

$680

62.1%

Liabilities

Q3 2008

Q3 2007

Change

Accounts Payable

$11,411

$10,335

10.4%

Long-Term Debt

$392

$579

(32.3%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q3 2008

Q3 2007

Change

Cash From Ops.

$998

$936

6.6%

Capital Expenditures

$172

$180

(4.4%)

Free Cash Flow

$826

$756

9.3%

Owner Earnings

$747

$538

38.8%

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

International Business Machines (NYSE:IBM)

$146,570

15.9

***

Hewlett-Packard (NYSE:HPQ)

$131,002

19.0

****

Dell

$54,490

19.4

**

EMC (NYSE:EMC)

$41,000

27.5

*****

Sun Microsystems (NASDAQ:JAVAD)

$17,110

30.2

***

Using the latest reported numbers from Capital IQ.

Keep your partners close and the competition in your vest pocket.

Related Foolishness:

Dell is both a Motley Fool Stock Advisor recommendation and an Inside Value pick. Pick up a free 30-day trial subscription or two and find out how this company charmed two newsletter analysts who had very different investment criteria. 

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.