On Jan. 17, IBM
- We already knew what the sales and earnings would look like after the preannouncement earlier this week. While that was a tasty starter, the details are really quite delicious.
- Here's a scrumptious chain of events for you: Sales growth easily outpaced inflation, but net profits ballooned even faster. Combined with a generous share buyback program, earnings per share virtually exploded. Still, free cash flow nearly managed to match the EPS gains.
- The world outside U.S. borders generated 65% of IBM's revenue, but 75% of its operational profits. There's greater-than-10% revenue growth happening in places like Poland, Pakistan, Portugal, and Paraguay.
(Figures in millions, except per-share data)
Income Statement Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Sales |
$98,786 |
$91,424 |
8.1% |
Net Profit |
$10,418 |
$9,492 |
9.8% |
EPS |
$7.18 |
$6.11 |
17.5% |
Diluted Shares |
1,451 |
1,554 |
(6.6%) |
Get back to basics with the income statement.
Margin Checkup
FY 2007 |
FY 2006 |
Change* |
|
---|---|---|---|
Gross Margin |
42.2% |
41.9% |
0.4 |
Operating Margin |
14.7% |
14.6% |
0.1 |
Net Margin |
10.5% |
10.3% |
0.2 |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Cash + ST Invest. |
$16,146 |
$10,657 |
51.5% |
Other short-term assets |
$37,031 |
$34,003 |
8.9% |
Liabilities |
FY 2007 |
FY 2006 |
Change |
---|---|---|---|
Short-term liabilities |
$32,076 |
$31,189 |
2.8% |
Long-Term Debt |
$19,539 |
$13,780 |
41.8% |
The balance sheet reflects the company's health. IBM chose to report some of their balances in a non-standard, lumped-together format.
Cash Flow Highlights
FY 2007 |
FY 2006 |
Change |
|
---|---|---|---|
Cash From Ops. |
$17,400 |
$15,307 |
13.7% |
Capital Expenditures |
$5,000 |
$4,700 |
6.4% |
Free Cash Flow |
$12,400 |
$10,607 |
16.9% |
$11,918 |
$10,075 |
18.3% |
Free cash flow is a Fool's best friend. Many of the cash flow figures come from the earnings call, where management handed out nice, round numbers. Owner earnings were calculated from reported financial items.
Competitive Context
Market Cap |
Trailing P/E Ratio |
CAPS Rating |
|
---|---|---|---|
Microsoft |
$315,610 |
22.1 |
*** |
IBM |
$143,790 |
15.4 |
*** |
Hewlett-Packard |
$112,990 |
16.4 |
**** |
Oracle |
$111,260 |
23.7 |
**** |
EMC |
$36,130 |
24.3 |
***** |
Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.
Related Foolishness:
- IBM Says It's a Beautiful World
- Fool Awards 2007: Most Shareholder-Friendly Company
- I Like Big Moats and I Cannot Lie
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.