HAND ($8-$6)..p/e none....beats on earnings and rev's..doesn't matter, all news sold.
Archive Headline
15-Jan-02
16:05 ET Handspring (HAND) 7.85 +0.15 (+2.0%): -- Update -- Announced Q2 EPS of ($0.12), 2 cents better than consensus; revs were $70.51 mln, ahead of consensus of $67.33 mln.
Handspring Loss Widens, Sees Better Sales
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By Franklin Paul
NEW YORK (Reuters) - Handspring Inc. (Nasdaq:HAND - news) on Tuesday reported a fiscal second-quarter loss that was wider than the year ago, despite improved holiday sales of its pocket-sized Visor devices, but said it sees revenues improving as it rolls out its new device, Treo.
Mountain View, California-based Handspring -- No. 2 in the handheld computer market after Palm Inc. (Nasdaq:PALM - news) -- also revealed that a supply problem has slowed production of Treo, a pocket-sized wireless communicator that serves as the company's primary new thrust this year.
But Chief Executive Donna Dubinsky said Treo, a personal organizer that is also a phone, has been shipped to marketing partners in Europe and Asia, and would likely begin sales in the U.S. via the Web in February and at retail by March.
``We feel very good about our ability to scale our production line,'' she told analysts on a conference call after the results were released.
Handspring said its fiscal second quarter net loss was $19.8 million, or 16 cents a share, compared to a loss of $15.2 million, or 15 cents per share, a year ago.
On an operating basis -- excluding expenses related to stock-based compensation and other items -- the loss was $14.4 million, or 12 cents a share, better than the Wall Street consensus estimate of 14 cents. The expected loss ranged from 12-to-16 cents, according to Thomson Financial/First Call.
Shares of Handspring fell to $7.20 in after hours trade on Tuesday, off from the close of $7.78. the shares have risen more than three-fold since Treo was unveiled in October.
REVENUES FALL 39 PERCENT FROM YEAR-AGO
Revenues for the second quarter, which ended on Dec. 29, fell to $70.5 million, from $115.6 million last year, a decline of 39 percent.
But, revenues were 15 percent higher than in the previous quarter, due to traditionally stronger holiday sales. Handspring reported revenues of $61.4 million in the fiscal first quarter, which ended in September.
``I am pleased that we were able to achieve our business objectives for the quarter,'' Dubinsky said in a statement. ``We participated well in the holiday demand, and exited the quarter with channel inventory within our target range.''
Dresdner Kleinwort Wasserstein analyst Stephen Sweeney said the revenue figure exceeded his estimates, but noted that gross margins were lower than anticipated, likely because of price cuts instituted by Handspring during the holidays to spur demand.
``Revenues were higher than expected, and margins were probably a little low,'' Sweeney said. ``But they beat the bottom line (forecast) on good cost controls.''
Analysts said the quarter was solid in terms of their ability to trim expenses and sell their remaining line of organizer models, priced at around $200, in anticipation of Treo, which will likely sell for $400 and higher.
But they note that Handspring has a tough job ahead of it as it tries to avoid speed bumps in the roll out of Treo, as it simultaneously works to convince buyers of its value.
Handspring's Dubinsky said that due to the problems with the supply of a key component, production of Treo has been ''slower than we would like.''
``Its a very risky proposition,'' said J.P. Morgan analyst Paul Coster. ``They have already run into production problems and it has yet to be proven that there is market receptivity at the price that hey are seeking for this device to ship them in volume.''
HANDSPRING STILL OPTIMISTIC
Handspring remains optimistic that consumers will warm to Treo, which has been lauded by media and has drummed up considerable buzz at trade shows since its unveiling in October.
Earlier on Tuesday, Handspring said it signed an agreement with British mobile phone group mm02 Plc (OOM.L) to distribute Handspring's new Treo family of phones in Europe. It also announced a distribution agreement with Swedish distributor APE Telecom to market Treo in Sweden.
Handspring says it sees its revenues for its fiscal fourth quarter, which ends in June, rising significantly, sparked by Treo sales. Revenues in the period are seen at $86 million to $96 million, likely up from fiscal third quarter revenues, which Handspring projects at $61 million to $66 million.
Dubinsky said that phones with price points even higher than where Treo will stand have succeeded in the past, and expects the devices features to attract a healthy audience.
``We have seen great success of high-end phones in the past,'' she said. 'Clearly they are at a price point for the type of consumer we are going after. This is within their means.''
Pacific Crest Securities analyst James Faucette notes that the delay will not be a big factor, if the product, once it reaches store shelves, meets robust demand.
``The delay hurts them, but the bigger question is ... what the ultimate demand is for it,'' he said. The real tricky quarter could be the third quarter when they have shipped
a substantial number of them, and wait to see if the carriers come back and reorder because they have sold out. |
