Palm Q4 Earnings Reported
Palm reported Q4 earnings after the close of market Thursday. The numbers easily beat Wall Street analyst consensus expectations but overall were poor year over year; and especially dim in comparison to very positive results from competitor Research in Motion.
For the quarter ending June 1, Palm earned $15.4m (15c/share) on revenue of $401.3 compared to $27.2m (25c/share) for the same period last year. Excluding one-time charges Palm said it would have earned $17.8m (17c/share) this quarter. Analyst consensus estimates (Thompson) were for earnings of $14.43m (15c/share).
Overall smart phone sales were up 34% to 2.4m units and sale of Treo smart phones were up 43% versus a year ago selling approximately 750k. On the negative, Administrative expenses, which includes outside legal expenses relating to Palms deal with Elevation Partners and other costs, skyrocketed to $1.53m for the quarter, up from $207k last year. Research and Development costs were also up dramatically to $2.1m for the quarter.
In the Analysts conference call, Palm’s CEO Ed Colligan characterized the timing and market growth as a great opportunity. He drew on baseball to sum up their current long term strategy saying “[Palm has] just thrown out the first pitch in a nine inning game.” Palm will be launching a number of products and have “major new platforms on the software and hardware front.”
In an effort to streamline development, significant parts of Windows Mobile platform devices will rely on third party manufacturing and development partners. Another internal group will focus on Palm system software efforts and in-house hardware platform designs. Elsewhere in product development, the much maligned, recently launched Folio mobile companion product, is planned to be expanded into what the company called a “full function mobile computer.”
With Research in Motion doing well, and the iPhone launching today, Palm is facing heavy competition. However the present earnings and in–development products are spun, Palm, and its new investors from Elevation Partners, have a big challenge and long road ahead to capitalize on market opportunity, improve profits and turn around the company.
More detailed press coverage on Palm’s finances can be found at:
