Handspring Revenues Jump on Strong Device Sales
NEW YORK (Reuters) - Handspring Inc. (HAND.O) on Thursday reported a third-quarter loss of $6.7 million on revenues that jumped 261 percent from a year ago, driven by sales of its popular hand-held computers, and pushing its stock higher in after-hours trade.
Handspring, maker of the pocket-sized personal information managers, also trimmed its outlook for sales during the 2001 calendar year and gross margins, citing price cuts by Palm Inc. (PALM.O), the dominant industry leader and Handspring's chief rival.
The Mountain View, Calif.-based company said its third-quarter loss, excluding amortization of deferred stock compensation and other special items, was 6 cents per share, on an increased number of shares outstanding. That compares to a per share loss of 13 cents one year ago.
Wall Street analysts surveyed by Thomson Financial/First Call had predicted losses in a range of 6 cents to 7 cents a share, with a consensus of 6 cents.
Revenues vaulted to $123.8 million from $34.3 million a year ago, and about $116 million in the second quarter. The figure exceeded analyst estimates, which were pegged at between $110 million and $120 million.
Including the amortization and other charges, the company reported a net loss of $27.2 million, versus a net loss of $21.5 million in the same period a year ago.
Following the release of the quarterly report, shares of Handspring rose to $15.02 on Instinet, after ending the regular Thursday session on Nasdaq at $14.25, up $2.20, or more than 18 percent.
VISOR DEVICES DRIVE RESULTS
Handspring, which went pubic June 2000, said its results were powered by strong demand for its new products, including the high-end Visor Platinum, and new distribution channels in Italy, Australia and New Zealand.
Analysts had trimmed their revenue estimates for Handspring after Palm, the dominant industry leader and Handspring's chief rival, in late March slashed its forecasts, citing the weak economy and bulging inventories. But on that same day, Handspring jumped to reassure investors, saying that its third quarter revenues would be on track with estimates.
On Thursday, Handspring Chief Executive Donna Dubinsky pointed to the company's ability to achieve revenue growth in what is usually a sequentially down quarter in the industry.
``We believe this growth demonstrates both acceptance of our new products as well as ongoing growth in the hand-held computing sector in spite of an economic slowdown,'' she said.
Epoch Partners analyst Matthew Andrews echoed that sentiment, pointing to the remarkable revenue growth during a period when consumers and corporations alike were believed to be thinking twice about technology purchases.
``The company defied seasonality on the top-line (revenues),'' he said. ``Everybody, including myself, took the cautious stance saying that if Palm is having its problems, maybe we should take a step back and cut estimates.''
``But not only did they reaffirm their guidance, they beat it pretty heavily,'' said Andrews.
GUIDANCE TRIMMED
Buoyed by early sales response to its newest product, the high-end Visor Edge, Handspring reiterated its outlook on fourth quarter revenues, which are expected to fall between $130 million and $136 million.
But it said the figures would likely come in at the lower end of the range, as the company feels the pull of an economic slowdown and a Palm supply glut.
Palm, faced with a tough new product transition that could see its inventories swell by $200 million in the quarter ending in May, on Wednesday lowered retail prices on most of the model still on store shelves.
As a result, Handspring lowered its expectation for calendar year revenue by five percent, to between $535 million and $560 million.
Losses for the June-ending 2001 fiscal year, excluding amortization and special items, should be about 29 cents a share, the company said. Analysts surveyed before the release of the data by First Call had expected a loss of between 27 cents and 30 cents, with a consensus of 27 cents.
Waving off some of the gloom hovering over the market in recent weeks since Palm's sobering warning, Dubinsky characterized the market as cloudy, perhaps, but not stormy.
``We see some softness in the economy, there's no doubt,'' she told Reuters in an interview. ``But we see it as a softening as opposed to a massive decline.
CIBC World Markets analyst Thomas Sepenzis said that while Handspring appears to be operating well, it will be hard for it to avoid the spillover from Palm's situation, as they are selling to the same potential customers, particularly since new Palm models, the m500 series, will hit store shelves in May.
``When the biggest player in the market is introducing new product that people want see and are waiting for, and they are blowing up the pricing structure of the industry by cutting prices on nearly every one of their products, its going to put pressure,'' he said. ``There is no way around it.''
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