On Jan. 17, processor peddler Advanced Micro Devices (NYSE: AMD) released earnings for the 2007 fiscal year, which ended Dec. 29.

  • Back out noncash goodwill impairment charges of $1.61 billion in the fourth quarter and ... well, 2007 still doesn't look good. Sans that massive item, the operating margin for the year was around (21%), and the net margin would be (29.4%).
  • A $614 million investment from a Dubai-based investor group helped stabilize the balance sheet, though AMD had to dilute the stock to meet its end of the bargain. And a heavy debt load still hangs over the company like the sword over Damocles.
  • On the bright side, AMD had $114 million of positive operating cash flow in the fourth quarter and came within $9 million of breaking even on a non-GAAP operating basis.

(Figures in millions, except per-share data. Data uses the latest reported numbers from Capital IQ, a division of Standard & Poor's.)

Income Statement Highlights

FY 2007

FY 2006

Change

Sales

$6,013

$5,649

6.4%

Net Profit

($3,379)

($166)

(1,935%)

Earnings Per Share

($6.06)

($0.34)

(1,682%)

Diluted Shares

558

492

13.4%

Get back to basics with the income statement.

Margin Checkup

FY 2007

FY 2006

Change*

Gross Margin

37.6%

50.0%

(12.4)

Operating Margin

(47.7%)

7.6%

(55.3)

Net Margin

(56.2%)

(2.9%)

(53.3)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

FY 2007

FY 2006

Change

Cash Plus Short-Term Investments

$1,889

$1,541

22.6%

Accounts Receivable

$640

$1,140

(43.9%)

Inventory

$821

$814

0.9%

Liabilities

FY 2007

FY 2006

Change

Accounts Payable

$1,009

$1,338

(24.6%)

Long-Term Debt

$5,031

$3,672

37.0%

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Operations

($257)

$1,287

N/A

Capital Expenditures

$1,686

$1,856

(9.2%)

Free Cash Flow

($1,943)

($569)

(241.5%)

Owner Earnings

($2,356)

($1,231)

(91.4%)

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Intel (Nasdaq: INTC)

$113,490

16.5

****

Texas Instruments (NYSE: TXN)

$41,470

17.0

****

NVIDIA (Nasdaq: NVDA)

$13,780

21.6

*****

Broadcom (Nasdaq: BRCM)

$12,770

81.70

***

AMD

$3,910

NA

**

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

Related Foolishness:

Intel is a Motley Fool Inside Value recommendation, and NVIDIA is a Stock Advisor pick. Try out either service free for 30 days.

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, Fool contributor Anders Bylund was an AMD shareholder but had no other position in any company mentioned. Fool rules are here.