Palm Reports Financial Results

Palm shares took a hit on Wednesday after the company reported disappointing financial results on Tuesday coupled with a disappointing
forecast for the current quarter. Highlights for the quarter included the introduction of the Palm Centro, the expanded international release of the Treo 500v and completion of the recapitalization deal with Elevation Partners.

Total revenue in the second quarter of fiscal year 2008, ended Nov. 30, was $349.6 million. Palm had generated $392.91 million in revenue the year prior. Despite the decrease in total revenue, smartphone sell-through for the quarter was 686,000 units, up 11 percent year over year. Smartphone revenue was $282.4 million. Palm had expected to ship the Verizon Palm Treo 755p, but certification issues delayed the release and certainly impacted Palm’s quarterly numbers. "There’s definitely lost business when you fail to ship during the holiday season," said Palm’s CEO Ed Colligan. "We have to build a broader array of products so one miss does not have such a big effect."

Palm is currently undergoing a restructuring program as part of a recapitalization deal with Elevation Partners. Former Apple Inc. executive Jon Rubinstein has joined Palm as executive chairman as part of the restructuring. Rubenstein played a key role in the development of products such as the Apple iPod and iMac computers. Rubenstein is expected to play a vital role in positioning Palm to "lead the next phase of the smartphone and mobile-computing markets."

The Centro has been a success in many ways, but Palm warned of a "tight component supply" for the device because of unspecified issues at one supplier. Priced at just $99, Palm also noted that some canibalization has occured of the higher priced Treo smartphone specific to Sprint’s network. "We saw some cannibalization, but we had expected that," said Colligan. "We are pleased with the early success of the Palm Centro and intend to deliver more Windows Mobile and Palm-based products throughout the next year."

The Treo 755p represents the end of the current generation of Palm smartphones, but Palm’s management certainly appears to have a clear grasp of what’s needed to get the company back on track. During the conference call, Colligan made it clear that Palm’s focus is on developing "breakthrough devices" and "revolutionary designs".

Palm Posts Q1 Loss

Palm announced earnings today, posting a quarterly loss for Q1. The loss was a result of intensified competition
in the mobile smartphone market from Apple’s iPhone and others.

Total revenue in the first quarter of fiscal year 2008, ended Aug. 31, was $360.8 million. Smartphone sell-through for the quarter was 689,000 units, up 21 percent year over year. Smartphone revenue was $302.2 million, up 12 percent from the year-ago period.

Palm, in its first financial report since it sold a 25 percent stake of the company to private equity firm Elevation Partners, posted a fiscal first quarter net loss of $841,000, or 1 cent per share, from a profit of $16.5 million, or 16 cents per share, in the year-ago period.

"The launch of our Palm Treo 500v with Vodafone and the Palm Centro with Sprint in September demonstrate our commitment to delivering competitive, high-quality solutions and expanding our reach to a broader market and range of customers," said Ed Colligan, Palm president and chief executive officer. "As we move toward completing the recapitalization transaction with Elevation Partners, we are excited to strengthen our ability to accelerate Palm’s growth in the future."