Research In Motion Hits the BlackBerry Jackpot: Fool by Numbers

On Oct. 4, mobile gadget master Research In Motion (Nasdaq: RIMM) released second-quarter 2008 earnings for the period ended Sept. 1.

• These brilliant results only look more impressive when you consider that RIM wasn't reliably profitable as recently as last year. It's the fourth quarter in a row of ever-faster revenue growth for the Canadians.
• Inventories are growing slower than revenues, meaning that RIM has little trouble pushing its products out the door.
• The strongest growth of all comes in Tom Gardner's favorite cash flow metric: owner earnings. That's a sign of strong operations, as opposed to shrewd investments or fancy footwork in the tax-man tango.
• Palm (Nasdaq: PALM) just showed some weakness, but RIM is doing just fine. We'll see which is the better sector indicator when Nokia (NYSE: NOK) and Apple (Nasdaq: AAPL) report earnings in the coming weeks.

(Figures in millions, except per-share data)

Income Statement Highlights

 

	Q2 2008	Q2 2007	Change
Sales	$1,372	$659	108.4%
Net Profit	$288	$140	105.3%
EPS*	$0.50	$0.25	100%
Diluted Shares	572.2	570.7	0.3%

*Adjusted for the recent 3-for-1 share split.

Get back to basics with the income statement.

Margin Checkup

 

	Q2 2008	Q2 2007	Change*
Gross Margin	51.3%	56.2%	(4.9)
Operating Margin	28.6%	27.3%	1.4
Net Margin	21%	21.3%	(0.3)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

 

Assets	Q2 2008	Q2 2007	Change
Cash + ST Invest.	$1,342	$697	92.4%
Accounts Rec.	$853	$377	126.4%
Inventory	$301	$196	54%

 

Liabilities	Q2 2008	Q2 2007	Change
Accounts Payable	$182	$121	50.7%
Long-Term Debt	$6.9	$6.9	0.1%

The balance sheet reflects the company's health.

Cash Flow Highlights

 

	Q2 2008	Q2 2007	Change
Cash From Ops.	$227	$251	(9.4%)
Capital Expenditures	$79.0	$68.6	15.1%
Free Cash Flow	$148	$182	(18.6%)
Owner Earnings	$250	$102	144.8%

Free cash flow is a Fool's best friend.

 

© 2007 Universal Press Syndicate.