Palm Reports Q2 FY 2010 Results
Palm, Inc. today reported that total revenues in the second quarter of fiscal year 2010, ended Nov. 27, 2009, were $78.1 million. Gross profit was $5.5 million, and gross margin was 7.0 percent. These results include the effects of subscription accounting applied to Palm webOS products as required by GAAP. In accordance with this methodology, revenues and direct cost of revenues for Palm webOS products (currently Palm Pre and Palm Pixi smartphones) are deferred and recognized over the products' estimated economic lives.
"We are continuing to execute strongly against our long-term strategy with the delivery of Palm Pixi, the new carrier launches completed this quarter, and the upcoming opening of Palm's full developer program," said Jon Rubinstein, Palm's chairman and chief executive officer. "We're still in the early stages of a long race, and we're energized by the opportunity to compete in this exciting market. We remain confident that Palm's innovative product design capabilities, integrated cloud services and the differentiated and delightful Palm webOS experience will provide the foundation for our sustained success."
To facilitate comparisons to Palm's historical results, Palm has included non-GAAP adjusted measures, which exclude the impact of subscription accounting, stock-based compensation and other items detailed later in this release. The company believes this information will help investors better evaluate its current period performance and trends in its business.
Non-GAAP Adjusted Revenues in the second quarter totaled $302.0 million, non-GAAP Adjusted Gross Profit was $77.3 million and non-GAAP Adjusted Gross Margin was 25.6 percent.
The company shipped a total of 783,000 smartphone units during the quarter, representing a 5 percent decrease from the first quarter of fiscal year 2010 and a year-over-year increase of 41 percent compared to the second quarter of fiscal year 2009. Smartphone sell-through for the second quarter was 573,000 units, down 29 percent from the first quarter of fiscal year 2010 and down 4 percent year-over-year.
On a GAAP basis, net loss applicable to common stockholders for the second quarter of fiscal year 2010 was $(85.4) million, or $(0.54) per diluted common share. This compares to a net loss applicable to common stockholders for the second quarter of fiscal year 2009 of $(508.6) million or $(4.64) per diluted common share. The company's second quarter of fiscal year 2009 results included a non-cash charge with a net impact of $396.7 million to the tax provision pertaining to the increase of the valuation allowance for the Company's U.S. deferred tax assets.
The company's net loss applicable to common stockholders on a GAAP basis reflects accounting guidance, effective in the first quarter of fiscal year 2010, which requires the anti-dilutive provisions of Palm's series C preferred shares and related warrants to be treated as derivatives for financial reporting purposes. The fair value of the derivatives were estimated as of the first day of fiscal year 2010 and are marked to market on a quarterly basis, with any change in value reflected in the company's financial results for the period. The series C derivatives balance was $178.7 million at the end of the second quarter of fiscal year 2010 compared to $235.0 million at the end of the first quarter of fiscal year 2010. This reduction in fair value resulted in a $56.3 million non-cash gain on series C derivatives and was reflected in the company's second quarter GAAP financial results. With regard to the series C derivatives, any future increases in Palm's stock price from period to period will be reflected as a non-cash loss on these derivatives in the company's financial results, and any future decreases will be reflected as a non-cash gain in the company's financial results.
Non-GAAP Net Loss for the second quarter of fiscal year 2010 was $(59.6) million, or $(0.37) per diluted share. This compares to a non-GAAP Net Loss for the second quarter of fiscal year 2009 of $(80.2) million, or $(0.73) per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of fiscal year 2010 totaled $(70.1) million. EBITDA, adjusted to exclude the impact of subscription accounting, stock-based compensation, net other income (expense), restructuring charges and a gain on series C derivatives, or Adjusted EBITDA, totaled $(48.3) million.
The company's cash, cash equivalents and short-term investments balance was $590.0 million at the end of the second quarter of fiscal year 2010. This includes net proceeds of approximately $360 million from the company's public equity offering, which closed on Sept. 23, 2009. Cash from operations for the second quarter of fiscal year 2010 was $16.7 million.
Palm may periodically provide new software features free of charge to customers of its Palm webOS products and currently recognizes Palm webOS product revenues and related standard cost of revenues on a subscription basis based on the applicable product's estimated economic life, which is currently 24 months. The company records deferred revenues and deferred cost of revenues on its balance sheet, and amortizes them into earnings on a straight-line basis over the estimated economic product life.
Palm announced today that it expects to early adopt two recently released accounting standards related to revenue recognition, Accounting Standards Update ("ASU") No. 2009-13 and ASU No. 2009-14, effective for its third quarter of fiscal year 2010. These accounting changes will result in a substantial portion of Palm webOS product revenues being recognized upon delivery. The remaining Palm webOS revenues, which are related to future services and deliverables, will be recorded as deferred revenues on the company's balance sheet, and amortized into earnings on a straight-line basis over the estimated economic product life, which is currently 24 months. Under the new standards, all related cost of revenues will be recognized upon delivery. This change in accounting will reduce the amount of revenues that Palm will defer on its balance sheet but will have no impact on cash flows and does not change how Palm accounts for Palm OS products, like the Centro, or its Treo line. Consistent with the company's past practice, Palm will continue to provide non-GAAP, adjusted measures that exclude the impact of deferred revenue accounting, stock-based compensation and other items as appropriate.
Source: Palm Inc. Press Release.
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Sell-Though
Also, any comments on the continued effects of price cuts on unit margin targets?
Not "Pre-verted"- Android Assimilation?
RE: Sell-Though
i want to know -
how many pres, pixis, centros, and treos each were sold and are now currently active in Q3? if you can't tell me, what are you hiding?
RE: Sell-Though
Sell-in is sales by Palm to those who sell.
Sell-through is (1) sales by Palm to end-customers and (2) sales of any type by those Palm sells to. Note that the latter does NOT say "sales to end-customers by those Palm sells to".
Palm explicitly said that Sprint was an 85% customer. Palm also VERY EXPLICITLY said that Sprint turns around and sells to RadioShack and BestBuy, among others.
There is no ambiguity.
Yes, that means reading ANYTHING about "Palm sell-through" is entirely bogus and almost-totally meaningless. The only partial information we get out of the bogus "sell-through" this time around is that Sprint couldn't sell to other venues.
RE: Sell-Though
If not, when? If they have something substantial to announce, we'll hear it at CES.
RE: Sell-Though
"Shipped 763k phones over the quarter"
"Sell-through was 573k"
Granted, this has been re-hashed from a couple news feeds, but even with Palm's fast and loose definition, it doesn't track...
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RE: Sell-Though
RE: Sell-Though
"Consistent with our past reporting, sell through represents sales by our carrier partners to their customers which may include indirect sales channels"
What?
Not "Pre-verted"- Android Assimilation?
RE: Sell-Though
2klbs wrote:"Consistent with our past reporting, sell through represents sales by our carrier partners to their customers which may include indirect sales channels"
What?
Yup - sell-through as defined by Palm is sales by those Palm sells to and, as noted above, Palm sells to Sprint who turns around and sells to the BestBuys of the world.
RE: Sell-Though
2klbs wrote:
"Shipped 763k phones over the quarter"
"Sell-through was 573k"
"Shipped" is "sell-in".
"Sell-through" is (1) devices sold to end-customers by Palm (via Web) and (2) devices sold by the companies Palm has sold-in to., not necessarily to end-customers.
As such, the above numbers just mean Palm sold-in a whole lot more than they sold-through - the BestBuys of the world might not be buying.
RE: Sell-Though
'just disappointed they continue to play the semantics game, even going so far as to "re-iterate" a thinly veiled nuance- most will assume they are indicating consumers.
I don't know why I feel so disillusioned at this point, although I accepted the cold logic of their new paradigm a while ago and its seeming inevitable result, I still have fond nostalgia when I look at all the Palm phones and PDAs and accouterments my son and daughter inherited (and use) after 12 years of my fandom.
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RIM in Q3: 10.1 million shipped
* Revenue: $3.92 billion vs. $3.78 billion consensus.
* EPS: $1.10 vs. $1.04 consensus.
* Subscriber additions: 4.4 million, vs. 4.1 million RBC est.
* Devices: 10.1 million shipped, including 75 millionth BlackBerry
Guidance:
* Revenue: $4.3 billion midpoint vs. $4.11 billion consensus
* EPS: $1.27 vs. $1.12 consensus
* Subscriber additions: 4.55 million midpoint vs. 4.45 million midpoint RBC est.
http://www.businessinsider.com/rim-crushes-quarter-guidance-strong-2009-12