On Jan. 24, communications chip designer Broadcom (Nasdaq: BRCM) released earnings for the 2007 fiscal year, a period ended Dec. 31.

  • Broadcom's profit margins deteriorated all through 2007 in a tough competitive environment -- only to jump back with a vengeance in the fourth quarter. Management credits successful launches of new Bluetooth, digital TV, and wireless networking products for the comeback.
  • The balance sheet made it through this tough year fairly intact and still debt-free.

 (Figures in millions, except per-share data)

Income Statement Highlights

FY 2007

FY 2006

Change

Sales

$3,776

$3,668

3%

Net Profit

$213

$379

(43.7%)

EPS

$0.37

$0.64

(42.2%)

Diluted Shares

577.7

588.3

(1.8%)

Get back to basics with the income statement.

Margin Checkup

FY 2007

FY 2006

Change*

Gross Margin

51.5%

51.1%

0.4

Operating Margin

2.3%

6.6%

(4.3)

Net Margin

5.7%

10.3%

(4.6)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

FY 2007

FY 2006

Change

Cash + Short-Term Investments

$2,328

$2,680

(13.1%)

Accounts Receivable

$369

$383

(3.6%)

Inventory

$231

$203

14.1%

Liabilities

FY 2007

FY 2006

Change

Accounts Payable

$314

$308

1.8%

Long-Term Debt

$0

$0

N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Operations

$832

$892

(6.7%)

Capital Expenditures

$160

$92

72.6%

Free Cash Flow

$672

$799

(15.9%)

Owner Earnings

$130

$347

(62.6%)

Free cash flow is a Fool's best friend.

Competitive Context

Market Cap

Trailing P/E Ratio

CAPS Rating

Intel (Nasdaq: INTC)

$121,008

17.6

****

Qualcomm (Nasdaq: QCOM)

$66,460

20.8

***

Texas Instruments (NYSE: TXN)

$40,320

16.3

****

Broadcom

$12,540

80.2

***

Infineon Technologies AG (NYSE: IFX)

$6,920

N/A

**

Using the latest reported numbers from Capital IQ. Keep your partners close and the competition in your vest pocket.

Related Foolishness:

Intel is an active Motley Fool Inside Value recommendation. Learn more about valuation by trying our Discounted Cash Flow calculator and other aspects of valuation by getting a free trial 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 had no position in any company mentioned. Fool rules are here.