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Operating Systems

PalmSource revenue, earnings down

The handheld operating system company reported third-quarter revenue and earnings that were down significantly compared with last year.

Handheld operating system company PalmSource reported revenue and earnings that were down significantly for its third quarter compared with a year ago.

The Sunnyvale, Calif.-based company saw revenue drop 18 percent for the quarter ending Feb. 27, 2004. Revenue came in at $21.6 million compared with $26.3 million in the same period a year ago. The company reported earnings of $597,000, or 5 cents a share, compared with $734,000, or 7 cents a share, the same period a year ago.

The company has $33.3 million in cash and cash equivalents and used $2.2 million during the quarter.

On Thursday, PalmSource shares rose $1.49, or 7 percent, to close at $21.91. After-hours trading saw shares fall $1.91, or nearly 9 percent, to $20.

The company said in a statement that it expects revenue in the fourth quarter to be around $17 million, with cash for operations in the $4 million-to-$6 million range.

PalmSource is focusing its OS efforts on smart phones, which analysts say have already begun to take customers away from handhelds.

To respond to that expected phone handset growth, PalmSource has developed two operating systems, Cobalt and Garnet, which were introduced in February. Cobalt adds features such as the ability to more easily switch between wireless networks, improved security and an enhanced capacity to open several programs at once. Garnet is based on Palm OS 5 and will target handhelds and entry-level handsets.