Palm Reports Q2 FY08 Results
Palm Inc today reported that total revenue in the second quarter of fiscal year 2008, ended Nov. 30, was $349.6 million. Smartphone sell-through for the quarter was 686,000 units, up 11 percent year over year. Smartphone revenue was $282.4 million.
Palm took a loss for the quarter of $9.6 million (or 9 cents a share), roughly in line with the warning issued earlier this month.
"We are transforming Palm to exploit the market opportunity and instilling operational rigor throughout the organization. We've taken actions to align our expenses to the current operating environment and are focusing on core initiatives that will have the greatest impact on achieving our long-term success," said Ed Colligan, Palm president and chief executive officer. "We are pleased with the early success of the Palm Centro and intend to deliver more Windows Mobile and Palm-based products throughout the next year."
Net loss applicable to common shareholders for the quarter was $9.6 million, or $(0.09) per diluted common share. Net loss applicable to common shareholders included stock-based compensation expense of $14.3 million, amortization of intangible assets of $1.0 million, restructuring charges of $10.1 million and accretion of Series B convertible preferred stock of $0.8 million. This compares to net income for the second quarter of fiscal year 2007 of $12.8 million, or $0.12 per diluted share.
Net loss in the second fiscal quarter, measured on a non-GAAP basis, totaled $7.8 million, or $(0.07) per diluted share, excluding stock-based compensation expense, amortization of intangible assets, restructuring charges and accretion of Series B convertible preferred stock and adjusting the related income tax provision to 42 percent. This compares to non-GAAP net income in the second quarter of fiscal year 2007 of $17.6 million, or $0.17 per diluted share, which excluded the effects of stock-based compensation expense, amortization of intangible assets and the related income tax provision.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled negative $33.3 million. EBITDA, adjusted to add back stock-based compensation, other non-operating expense and restructuring charges, or Adjusted EBITDA, totaled negative $8.7 million.
Q3 Fiscal Year 2008 Guidance
- Revenue is expected to be between $310 million and $320 million;
- Gross margin is expected to be in the range of 30.3 percent and 30.8 percent on a GAAP basis and between 30.5 percent and 31.0 percent on a non-GAAP basis;
- Operating expenses are expected to be in the range of $136 million to $138 million on a GAAP basis and between $112 million and $115 million on a non-GAAP basis;
- Annual effective tax rate is expected to be 32 percent on a GAAP basis and 27 percent on a non-GAAP basis;
- Loss per common share is expected to be in the range of $(0.31) to $(0.33) on a GAAP basis and $(0.14) to $(0.16) on a non-GAAP basis;
- Net loss on a GAAP basis is expected to be in the range of $30 million to $33 million and earnings before interest, taxes, depreciation and amortization, adjusted to add back stock-based compensation, restructuring charges and other non-operating expenses, or Adjusted EBITDA, is expected to be in the range of negative $7 million to negative $10 million;
- SFAS 123(R) stock-based compensation expense, before taxes, is expected to be between $5 million and $6 million and amortization of intangible assets is expected to be $1 million. We also expect a $16 million to $18 million restructuring charge to earnings for recent organizational changes, which will include severance and facility closure costs. These amounts and the related tax amounts are excluded from Palm’s third quarter of fiscal year 2008 outlook on a non-GAAP basis; and
- The company will suspend specific financial guidance in future quarters, but will continue to provide general business guidance and comments on industry trends.
Related Article: Palm Q3 FY08 Conference Call Highlights
Source: Palm Inc Press Release