Palm Reports Q1 FY06 Results
Palm today reported revenue of $342.2 million in its first quarter of fiscal year 2006, ended Sept. 2, up 25 percent from the year-ago period and marking the ninth-consecutive quarter of year-over-year growth.
Net income was $18.2 million, or $0.35 per diluted share. This compares to net income for the first quarter of fiscal year 2005 of $19.6 million, or $0.38 per diluted share, and net income for the fourth quarter of fiscal year 2005 of $17.7 million, or $0.35 per diluted share.
Net income in the first fiscal quarter, measured on a non-GAAP basis, totaled $21.1 million, or $0.41 per diluted share, excluding the effects of amortization of intangible assets and deferred stock-based compensation. This compares to non-GAAP net income in the first quarter of fiscal year 2005 of $21.9 million, or $0.43 per diluted share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation.
The company generated $48.5 million in cash and cash equivalents from operations in its first quarter of fiscal year 2006, bringing the total cash and investments balance to $411.3 million at quarter's end. DSO, or days sales outstanding, were 34 days at the end of the quarter compared with 44 days in the year-ago period.
"We're pleased with the company's performance during the quarter," said Ed Colligan, Palm president and chief executive officer. "Treo smartphone sell-through was 470,000 units, which reflects an increase of more than 160 percent from the year-ago period. Our share in the handheld-computer market rose, and we're excited about our overall product roadmap."
Q2 Fiscal Year 2006 Guidance
In its pending conference call to investors today, the company will provide forward guidance for the second quarter of fiscal year 2006. The quarter's guidance includes the following:
- Revenue is expected to be between $435 million and $440 million;
- Gross margin is expected to be in the range of 30.0 percent to 30.5 percent;
- Operating expenses on a GAAP basis are expected to be between $100 million and $102 million, and, on a non-GAAP basis, operating expenses are expected to be between $97 million and $99 million; and
- If the company's results for the second quarter of fiscal year 2006 are as planned, it is likely that the deferred tax asset valuation allowance will be released. If this occurs, it would result in a one-time benefit to the tax provision of approximately $240 million to $250 million, the company's effective tax rate would also change to 40 percent for the second quarter and the remainder of fiscal year 2006. Should the deferred tax asset valuation allowance be released in the second quarter, the company anticipates that earnings per share for the quarter on a GAAP basis will be in the $5.00 to $5.20 range and, on a non-GAAP basis, in the $0.38 to $0.43 range. If the company does not reverse the deferred tax asset valuation allowance during the quarter, the tax provision for the quarter is expected to be in the range of $3.0 million to $3.2 million with earnings per share on a GAAP basis, of $0.55 to $0.60 and, on a non-GAAP basis, of $0.60 to $0.65.