PALM, WEEEEEEEEEEEEEEEEE, The street is looking for any kind of positive
(REUTERS) UPDATE 2-Palm earns slim quarterly net profit
UPDATE 2-Palm earns slim quarterly net profit
(Recasts, adds details, analyst comment, byline, previous
SANTA CLARA, Calif.)
By Franklin Paul
NEW YORK, March 21 (Reuters) - No. 1 handheld computer
maker Palm Inc. <PALM.O> on Thursday reported a third-quarter
net profit, as strong demand for new products helped revenues
beat analysts' expectations even though they were sharply below
a year ago.
The Santa Clara, California-based company, which dominates
the market for both personal digital assistants and the
software systems that power them, said its actual net income
was $2.9 million, or about 1 cent per share, compared to a net
loss of $1.9 million, or nil per share.
Palm, which introduced its I705 wireless device during the
quarter, said its actual net income figures were prepared
according to Generally Accepted Accounting Principles (GAAP).
Excluding the effects of special items, such as writedowns
for restructuring and a $28 million benefit from special excess
inventory, the company reported a loss of $14 million, or 2
cents a share. This compared with a profit of $9.3 million, or
2 cents per share, for the third quarter of fiscal year 2001.
The Wall Street consensus estimate was for a loss of 4
cents, with forecasts ranging from a loss of 2 cents to a loss
of 7 cents, according to research firm Thomson Financial/First
Call.
Revenues for the third quarter, which ended March 1, were
$292.7 million, off about 38 percent from $470.8 million a year
ago. Still, analysts were impressed that revenues came in about
$40 million above the Wall Street's average forecast, according
to First Call.
"It's a great step," CIBC World Markets analyst Tom
Sepenzis said. "They are going in the right direction, taking
baby steps and look like they are going to hit their
milestones."
Shares of Palm rose in after hours trade, climbing to $3.40
after closing on Thursday at $3.17, up more than 6 percent.
SIGNS OF RECOVERY
Palm, which struggled in 2001 with a startling downturn in
demand, mounting competition, and a price war with rival
Handspring Inc.<HAND.O>, has pledged to right itself this year.
It has set an aggressive schedule for developing new hardware
models and expanding the reach of Palm OS, its operating
systems software.
The company said its has experienced "tangible progress" in
implementing its fiscal strategy, and said it is more confident
about its plan to return to profitability.
"Cash is up, inventories are down ... this leads me to
conclude that Palm's financial position has dramatically
improved in the last few months," Eric Benhamou, Palm's
chairman and chief executive, said in a conference call.
J.P. Morgan analyst Paul Coster said that while the result
were far from stunning, the company should be commended for
righting itself and turning in yet another quarter where it
made good on its objectives.
That's in sharp contrast to a year ago, he recalled, when
Palm fumbled the rollout of a new high-end unit as over the
course of 2001 it fought off growing competition from handhelds
powered by Microsoft Corp.'s operating system software.
"We have to remind ourselves just how bad it was and how
far they have come in the last two or three quarters," he told
Reuters. "It seems to feel like a different company."
For the first time Palm's reported revenues for PalmSource,
its software group, the result of a key move that split its
operations from Palm's unit that makes handhelds that bear
Palm's brand name.
PalmSource revenues were $19.5 million, and its pro forma
operating loss was $1 million. Meanwhile, Palm said it shipped
1.3 million Palm-branded handhelds in the quarter, off from 1.5
million in second quarter, which includes the holiday season.
Overall more than 17 million have shipped.
Palm said the average selling price of its devices was
$183, up from $164 in the second quarter, and suggested that
that figure would have been higher were it not for its decision
to continue selling older, lower-priced units.
Looking ahead, the company said it expects revenues for its
fourth quarter, which ends in May, to be around $290 million to
$300 million. One year ago the company reported fourth quarter
revenue of $165 million.
((-- Franklin Paul, New York Technology Desk, 646-223-6195))
REUTERS
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