Palm's loss narrower than expected
update Amid a weak market for handhelds, the company posts a loss of 6 cents per share, better than the loss of 8 cents per share analysts expected.
The Milpitas, Calif.-based company reported a net loss of $258.7 million, or 45 cents per share, on revenue of $172.3 million for its first quarter of fiscal 2003. In the same period a year ago, the company had a net loss of $32.4 million, or 6 cents per share, on revenue of $214.3 million.
Excluding amortization of intangible assets, separation costs and restructuring charges, Palm lost $36.4 million, or 6 cents per share, for the quarter, which ended Aug. 30. This compares with a pro forma loss of $38.7 million, or 7 cents per share, last year.
Analysts were expecting a pro forma loss of 8 cents per share, according to earnings tracking firm First Call.
On a conference call with analysts in June, Chief Financial Officer Judy Bruner projected the company would have revenue of $175 million to $185 million.
"We are pleased to have completed our key 2002 enterprise strategy objective and its various underlying milestones during the quarter," Palm Chief Executive Officer Eric Benhamou said in a statement. "We look forward to the launch of the most comprehensive new product cycle in Palm's history, beginning this fall, and to the growth opportunities it will stimulate in the handheld industry."
Citing a cautious economic environment, Bruner added that revenue for the current quarter--the second quarter--would be down 10 percent to 15 percent, to between $245 million and $265 million from $290 million, compared with last year.
"Consumer spending is fragile and enterprise spending remains weak," she said.
The company expects to reach break even in the current quarter.
Benhamou said Palm managed to reduce inventory in the first quarter. Channel inventory was cut to 6.5 weeks worth from 8 weeks in the same period a year ago.
In addition, Palm used about $30.4 million of its cash reserves, leaving the company with about $238.3 million in cash and cash equivalents, it reported.
The company said it shipped 819,000 handhelds in the quarter and 19 million overall. More than 24 million devices using the Palm operating system had been shipped as of Aug. 30, the company reported.
The average selling price of Palm handhelds fell to $167 in the first quarter from $216 in the fourth quarter, Bruner said
Palm shares closed up 4 percent to 76 cents per share before the announcement. In after-hours trading, shares were down nearly 7 percent, to 71 cents, according to Island ECN.
The company is scheduled to hold an analysts' day on Oct. 28, when it is expected to announce new devices and provide investors with more strategic details.
In other Palm news Monday, the company announced new server software for large businesses that allows owners of i705 and m500 series devices to wirelessly access e-mail and corporate information. The company also introduced a new branding strategy.