Handspring Narrows Loss on Lower Sales
Handspring today announced results for the second quarter of fiscal 2003 ended December 28, 2002. Revenue for the quarter totaled $47.8 million, which included $31.9 million in communicator sales and $15.9 million in sales of organizers and accessories. Revenue for the second quarter was down from $54.1 million in the first quarter and from $70.5 million in the second quarter a year ago.
On a GAAP accounting basis, net loss for the period totaled $12.3 million, or $0.08 per share, a significant improvement from a loss of $19.8 million or $0.16 per share in the same quarter a year ago. On a pro forma basis, excluding amortization of deferred stock compensation and intangibles, the company reported a net loss of $10.0 million for the quarter, or $0.07 per share, improved from $14.4 million or $0.12 per share a year ago.
"We were pleased to add more than 50,000 new Treo end users this past quarter. This growing acceptance gives us confidence in our long term success," said Handspring CEO Donna Dubinsky.
The company reported gross margins of 27.4% and total operating expenses, excluding amortization of deferred stock compensation and intangibles, of $23.4 million for the second quarter.
Highlights of the second quarter include:
- Release of the GPRS software worldwide
- Launch of the Treo 270 with Telcel, the leading Mexican network operator, through a distribution agreement with Celex
- Launch of the Treo 270 with CEC Telcom and Grandtech for distribution in China
- PC Magazine's Technical excellence award at Comdex 2002
- Computer Reseller News' Best New Product of the Year award, citing its technical ingenuity
On the news, Handspring shares dropped 14 percent to 95 cents in after-hours trading action, following a decline of 3.5 percent in regular trading.
Handspring also announced today that it has entered into an agreement to restructure its lease agreements on two buildings that the Company no longer plans to occupy. The closing of the restructuring is subject to certain closing conditions and is anticipated to be completed later this month. The restructured lease agreements allow Handspring to reduce substantially the previous lease obligation of approximately $350 million over the next 12 years. In exchange, Handspring has agreed to pay total consideration of $61.2 million to the building landlord and contractor. Of this consideration, $15.3 million will be paid in Q3 from the Company's unrestricted cash and $40.9 million will be paid from previously restricted cash. Handspring will pay an additional $5.0 million in various debt and lease payments over the next 5 years. Handspring will also issue to the landlord warrants to purchase 10 million shares of Handspring stock. Handspring anticipates recording a charge against earnings of $75 to $80 million in Q3 to account for the transaction.
As of December 28, 2002, prior to the completion of the lease restructuring, Handspring's total cash and restricted investments balance stood at $110.0 million, down $8.0 million from the previous quarter. Of the total cash and investments balance, $65.7 million was unrestricted and $44.2 million was in the form of restricted cash investments.
"While our long term outlook remains positive, we see a number of challenges in the next quarter that make us cautious for our near-term business outlook," said CEO Dubinsky.
Handspring expects that revenue from organizers in Q3 will decline substantially. They also expect that the sell through of Treo Communicators to increase sequentially, however, communicator revenue in Q3 will decline slightly as channel partners sell through existing inventory. Furthermore, Handspring expects to reduce expenses through several actions, including recent reductions in headcount, restructuring of lease arrangements, product cost reductions, and management of other operating expenses.
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RE: Handspring's day of reckoning is near!
I dunno Handspring has to think of something good...
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RE: Handspring's day of reckoning is near!
I hope Handspring will survive. It is good for the economy, but I no longer look to Handspring as a tech innovator that satisfies my company needs. Competition offers more!
TSC
RE: Handspring's day of reckoning is near!
i don't know what they've got up their sleeve, but i fear it's little more than a naked arm.
RE: Handspring's day of reckoning is near!
It's 3 now...don't forget the NZ90.
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RE: Handspring's day of reckoning is near!
I'm hoping for an OS 5 Treo w/ SDIO, but unless the price is really good, it's not enough.
RE: Handspring's day of reckoning is near!
Ah..Yes sony now has 3 its amazing.....
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RE: Handspring's day of reckoning is near!
But... It would be nice if Rogers/ Handspring lowered the price of the 180 here in Canada - they still want $599 CAD, after activation! Staples in Toronto wants $925 CAD w/o activation, gimme a break! My buddy has one (got it on ebay), but it would have been nice to get it at $99 USD, it's a great little device. It's too bad it's soooo expensive in Canada, I'm sure they've sold at least 2.
RE: Handspring's day of reckoning is near!
RE: Handspring's day of reckoning is near!
RE: Handspring's day of reckoning is near!
RE: Handspring's day of reckoning is near!
1. Buy a Treo 180 communicator with a new T-Mobile service activation from Handspring.com between January 1 and January 31, 2003
2. Add 10 or 20MB T-Mobile Internet (GPRS) data services to your plan ($19.99/mo. and up) NOTE: You must keep this 10 or 20MB GPRS plan active for at least 121 days or you will be charged a $150 cancellation fee.
So, I don't know if that's such a good deal or not.
RE: Handspring's day of reckoning is near!
My buddy who got the one off ebay for $350 CAD from a guy in Canada also had to pay Rogers Wireless extra for the SIM card. They are the only GSM provider that sells the TREOs here. Oh well, not much in the way of competition. They probably won't even put it on sale, their usual track record is to just yank it off the market. I'll stick with my Nokia 8390 and m105 for the time being. At least I got great deals on those!
Thanks for your help, ozz.
RE: Handspring's day of reckoning is near!
I'm aware of the T-mobile deal, but not available in Canada! Rogers (Cable, Internet, Wireless) is known for their monpolistic practices here, hence the outrageous prices on the Treo. I gave in and got my wireless service with them, because it actually is the best, but I refuse to buy cable and internet services from them, so I use an alternative (CHEAPER) provider!
Some suggestions
1. Make battery replaceable - all phones can take spare battery, why not Treo?
2. SD - keeps data alive in case battery's flat.
3. Bluetooth - I've got a T68i with the bluetooth headset and it is way cool. Won't be considering wires any more.
4. Keep it small, and light. I don't mind to pay a bit more for a sexy number.
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Handspring's day of reckoning is near!