Palm Reports Bad Quarter, But Not as Bad as Expected
Palm, Inc. has reported the results for its fourth quarter of fiscal 2001. It has narrowly beat both analysts' expectations and its own revised projections, posting a loss of $153.6 million, or 16 cents a share. It reported revenues of $165.3 million. Analysts had been expecting losses of 19 cents a share on revenues of $145.5 million.
In comparison, in the same quarter last year, Palm reported revenue more than twice that and last quarter its revenue was almost three times greater.
The total of Palm's quarterly loss did not include considerable restructuring and inventory write-offs. During the quarter, Palm took a charge of $268.9 million to write-off components, work-in-process, and finished goods not expected to be used or sold.
The company also took a restructuring charge of $60.9 million relating to real-estate consolidation costs and employee severance expenses. The severance charges related to previously announced layoffs involving over 500 employees and contract workers.
Actual losses were $392.1 million, or 69 cents per share.
Though some have predicted that Palm will soon run out of operating cash, Palm ended its fiscal year with $513.8 million in cash and established a $150 million asset-backed, borrowing-base credit facility.
In its upcoming quarter, the first of its 2002 fiscal year, revenue is likely to fall between $200 million and $220 million, lower than the $239 million analysts had expected. Chief Financial Officer Judy Bruner said yesterday that Palm is starting to see increased demand as its new products hit the market.
Palm CEO Carl Yankowski said that "volume shipment of the m500 series and close collaboration with our channel partners helped spur end-user demand, resulting in overall reduction in channel inventory levels during the fourth quarter."
Palm's management teams expects the company to turn a profit by the second quarter of fiscal 2002, which ends November 2001. This turnaround will be powered by sales of its new products and cost-cutting efforts, including laying off about 25% of its employees.
"We remain very encouraged by Palm's very strong product positioning," Mr. Yankowski said yesterday. "The long-term value proposition of the handheld sector remains huge with the promise of exceeding the penetration rate of personal computers."
Palm shipped 6.4 million handhelds during this fiscal, bringing the total number of Palm-branded devices ever shipped to about 13.7 million.
In after-hours trading, Palm shares rose 90 cents, or 17.3%, to $6.09. During the regular session, shares fell 4 cents, or 0.8%, to $5.19.
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