News Feature

Palm Profit Drops Despite Strong Smart-Phone Sales

March 23, 2007 — CIO —

Amid rumors that the company could be acquired, Palm reported Thursday that its third-quarter profit was US$16.5 million, down from $19.8 million for the same quarter last year.

Palm recorded $410.5 million in revenue thanks to strong sales of its Treo smart phone, up from the $388.5 million the company collected for the third quarter of 2006.

Excluding certain charges, the company generated earnings of $0.16 per share for the period ending Feb. 28, falling below last year’s mark of $0.19 but beating estimates from Thomson Financial analysts of $0.12 on a non-GAAP (generally accepted accounting principles) basis. Palm’s revenue also beat the Wall Street estimate of $403.6 million.

The company’s news release did not mention persistent industry buzz that the company could be acquired, by either Motorola or Nokia. Company leaders forecast a strong fourth quarter, with revenue expected to fall between $400 million and $410 million thanks to continuing global smart-phone sales, said company CEO Ed Colligan in a statement.

Asked directly about the acquisition rumors during a conference call with analysts, Palm CFO Andy Brown declined to say anything specific. "There’s a lot of rumors and speculation out there, and it’s our practice not to comment on that kind of stuff," he said.

Brown did describe the changing face of Palm’s revenue, which included $354 million from smart-phone sales and only $57 million from handhelds. That is a large swing from 1996, when Palm launched its Palm Pilot handheld organizer, a product that helped define the PDA market and generated all the company’s revenue. Today Palm is migrating from that simple PC-synchronized device to phone-enabled handhelds.

"The revenue mix was 86 percent from smart phones and 14 percent from handhelds, as we continue to drive our company to the more profitable smart-phone business," he said. That change is happening fast: Palm’s handheld revenue for the quarter was down 44 percent from the same period last year.

On the smart-phone side, Palm now has four models in production, including the newest, the Treo 680 and Treo 750, Colligan said. Although the units sell at higher prices than do competing smart phones, Palm has an advantage in the products’ diversity, he said. The lineup includes both the Palm OS and Microsoft’s Windows Mobile OS, and spans three different radio technologies: evolution-data optimized, universal mobile telecommunications system and general packet radio service/enhanced data rates for GSM evolution.

Just before the earnings call began, Palm also released the news that it had won a round in its patent fight against NTP, the same company that won a $612.5 million legal award in 2006 from Research in Motion, after a similar fight about RIM’s BlackBerry.

1 | 2 |next page »

Comments

Share [+]

TOOLS

Comments

Digg This

SlashDot

CENTER OF EXCELLENCE

Infrastructure

» Outbound Email and Data Loss Prevention
This report shows the findings of a recent Proofpoint and Forrester Consulting study on e-mail security, data loss prevention, and includes statistics on electronic risks.

» A Modern Approach to On-Demand Email and Data Security
Learn how Proofpoint delivers a dedicated, hosted e-mail security solution that combines state-of-the-art anti-spam and virus control.

» A Proactive Approach to e-Discovery
Learn about the key e-discovery challenges facing legal and IT departments today and how businesses can develop an e-mail archiving strategy to deal with e-discovery requests.

» The Advantages of Identity Based Encryption
Download this paper to learn why e-mail encyrption is critical to an organization's overall security architecture and the advantages of identity-based encryption.

» Global Best Practices in Email Security, Privacy and Compliance
This whitepaper discusses the latest global regulations that impact the e-mail security policies and strategies of today's enterprises, universities and government organizations.

Center sponsored by