Handspring Reports Quarterly Results

Handspring today reported results for their first quarter of fiscal 2004 ended September 27, which included the first initial shipments of its new Treo 600 smartphone.

Revenue for the first quarter of fiscal 2004 was $13.1 million, down from $14.5 million in the fourth quarter of fiscal 2003 and from $54.1 million in the first quarter a year ago. Revenue for the quarter included $10.5 million in communicator sales and $2.6 million in organizer and accessory sales and other revenue. Treo 600 production started late in the quarter, therefore limiting revenue for the period. The Company exited the quarter with a backlog of orders.

On a GAAP basis, net loss for the period totaled $13.9 million, or $0.09 per share as compared to a net loss of $13.0 million, or $0.09 per share in the fourth quarter of fiscal 2003 and a net loss of $15.3 million or $0.11 per share in the first quarter a year ago.

"We were pleased this quarter to have certified and started shipping the new Treo 600 smartphone on both the Sprint network in the U.S. and the Orange network in Europe," said Donna Dubinsky, chief executive officer of Handspring. "In addition, we are delighted to be launching the product with support from three additional U.S. carriers, specifically AT&T, Cingular and T-Mobile."

As of September 27, 2003, Handspring's unrestricted cash and short-term investments totaled $18.9 million, down $18.0 million from June 28, 2003. As part of the merger agreement between Palm, Inc. and Handspring, Palm has agreed to provide up to a $20.0 million line of credit to Handspring for working-capital purposes, subject to certain conditions. To date, Handspring has not borrowed funds from Palm.

Handspring currently is shipping its new flagship Treo 600 smartphone to Sprint in the U.S. and Orange in Europe and began selling the Sprint product on the Handspring.com website yesterday. The Company expects to make Treo 600 available to Cingular, T-Mobile and AT&T customers soon. Handspring also will deliver the Treo 600 to select distribution partners in the U.S., Europe, Asia and Latin America to broaden its global distribution of Treo 600 this calendar year.

Merger with Palm Solutions Group
On September 26, 2003, the Securities and Exchange Commission declared effective Palm's registration statement on Form S-4, which includes the proxy statement for the proposed merger of Handspring and the Palm Solutions Group of Palm, Inc. Handspring will hold a special stockholders meeting on October 28, 2003 to vote on the merger. All Handspring stockholders of record as of September 23, 2003 are eligible to vote at the meeting or by proxy. The merger is expected to close on October 28, 2003.

"We are pleased with the progress of our integration planning for Handspring's merger with the Palm Solutions Group of Palm, Inc.," said Dubinsky. "We believe that the combined company, under the palmOne name, will continue to be a global leader in mobile computing."

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Tumbling Handspring

JarJar @ 10/9/2003 9:23:11 PM #
The aquisition of Handspring is such corporate buddy-buddy welfare. Handspring would have tumbled downward and outward if they weren't bought up by Palm.

Now Dubinski and the executive team get to keep their jobs and all the wonderful perky things. The little guys can get laif off. The shareholders get their shares diluted downward.

Palm could have easily waited and got Handspring for basically nothing. Handspring was on its way out anyway.

These little corporate games are what the Palm management loves to spend their time on instead of engineering devices.

RE: Tumbling Handspring
The Ugly Truth @ 10/10/2003 6:20:57 AM #
The aquisition of Handspring is such corporate buddy-buddy welfare. Handspring would have tumbled downward and outward if they weren't bought up by Palm.

Yes, but what would it do to the platform if one of the two original Palm OS companies went bankrupt?

Now Dubinski and the executive team get to keep their jobs and all the wonderful perky things. The little guys can get laif off. The shareholders get their shares diluted downward.

True, but how is that different from any other big business? You're not in Kansas any more, Toto.

Palm could have easily waited and got Handspring for basically nothing. Handspring was on its way out anyway.

Getting the remnants of Handspring in 2004 (when they would finally have burned through their remaining capital) would not have been worth it to Palm. By then Sony-Ericsson, Samsung (already becoming the new Sony), and PPC companies will have plagiarized the design of the Treo 600, so Palm/Handspring's current six month advantage would have evaporated.

These little corporate games are what the Palm management loves to spend their time on instead of engineering devices.

What else do you expect from a company with 5000 Vice-Presidents? (I believe 90% of the people currently employed at Palm are Vice-Presidents of something.) It was a shame to see that engineering seemed to have stalled for a few years. But the design of the T|T, Tł and the Treo 600 prove that Palm and Handspring still have what it takes to put out the best PDAs around. I just hope the foreign (Mexico, China, etc.) production houses don't cut corners on the hardware. (Just ask HandEra about the problems they had with the manufacturing of the 330.) Japan and Korea are already taking over the domestic auto industry. Is their dominance in electronics also inevitable?


Sometimes the truth just isn't pretty™

RE: Tumbling Handspring
Bostonnerd @ 10/10/2003 11:13:14 AM #
"But the design of the T|T, Tł and the Treo 600 prove that Palm and Handspring..."

Were these actually even designed by Palm? Ideo has done much of the design work (Mechanical, Electrical, and Industrial) designs for the Visors, Palm V, and probably many others. See www.ideo.com

RE: Tumbling Handspring
The Ugly Truth @ 10/15/2003 10:18:42 AM #
I just hope the foreign (Mexico, China, etc.) production houses don't cut corners on the hardware.

I wonder if this is the root of the Tł problems now hurting Palm's reputation.

Sometimes the truth just isn't pretty™

19,000 Treo 600 units already sold

fool faughter @ 10/9/2003 10:10:54 PM #
Earnings call indicates that 19,000 units are already sold. Seems like a pretty huge dent already in this quarter in comparison to the last, with 3 months yet to go.
RE: 19,000 Treo 600 units already "sold".
The Ugly Truth @ 10/10/2003 8:01:57 AM #
Guess again. How many of those were "sold" to wireless carriers as part of the roll-out? I think Palm/Handspring have priced these phones too high - again - and that's going to hurt sales. I'm waiting to see the outcome of the current SD Toasting Saga before I get mine.

http://www.palminfocenter.com/view_story.asp?ID=6086

Palm: Can you hear me? Can you hear me now?


Sometimes the truth just isn't pretty™

Prediction...
TooMuch @ 10/10/2003 4:33:00 PM #
The Treo 600 is the new standard in smartphone and it will become the #1 smartphone in the world within six months. What will everyone say then? The world is falling and Palm is a bunch of idiots?

RE: 19,000 Treo 600 units already sold
Foo Fighter @ 10/10/2003 5:09:58 PM #
The Treo 600 is a fantastic Smartphone, which I covet. But there is no way in hell it will become the "number one" phone in six months, not at this price anyway. You're forgetting that Symbian based Smartphones are the market leaders, and I expect them to remain so for quite a long time.

-------------------------------
My blog: www.pocketfactory.com
RE: 19,000 Treo 600 units already sold
TooMuch @ 10/11/2003 10:05:37 AM #
I couldn't resist having a little fun with all the poo-pooing:)

Familiar

Palm4u @ 10/10/2003 11:35:45 AM #
Hm.... sounds familiar.... someone (Handspring) goes to start a brand new product, then crumbles cause no one buys extra spring board modules....

Tapwave goes and creates a brand new PDA.... game modules needed for future? Hmm..... sounds familiar indeed.

================================
PDAs rule the world !

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