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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

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Colligan: RESIGN!

mikecane @ 12/18/2007 4:31:35 PM # Q
>>>"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.

Can this guy put together a sentence that's NOT all weaselly and non-sensical?

I mean, WTF does any of that MEAN?

>>>The company will suspend specific financial guidance in future quarters, but will continue to provide general business guidance and comments on industry trends.

We're toast. But we think you're dumb enough not to notice unless we open our yaps and spill the beans.

Colligan: RESIGN!

RE: Colligan: RESIGN!
wildmantrader @ 12/18/2007 4:32:47 PM # Q
I second that motion.
RE: Colligan: RESIGN!
madmaxmedia @ 12/18/2007 5:57:18 PM # Q
LOL, I think Dilbert's boss joined Palm's board too.

RE: Colligan: RESIGN!
Dr Opinion @ 12/18/2007 8:54:49 PM # Q
Translation follows for the non-businessly gifted:

"We are transforming Palm to exploit the market opportunity..." == Palm was not organized to exploit the market opportunity identified by our new owners. But they're fixing that.

"...and instilling operational rigor throughout the organization..." == Palm lacked the operational rigor demanded by our new owners. But they're changing that.

"...We've taken actions to align our expenses to the current operating environment..." == We were spending loot on inappropriate things, given that we're losing money. But our new owners have fixed that, and right sharpish. :D

"...and [we] are focusing on core initiatives that will have the greatest impact on achieving our long-term success..." == We've let the smartphone angle slip a little, but our new owners are fixing that.

See? Easy. :)

------
"People who like M$ products tend to be insecure crowd-following newbies lacking in experience and imagination."

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More Palm Devices?

theog @ 12/18/2007 5:33:36 PM # Q
Wow... more palm OS devices? I don't think so. I hope they can at least produce the palm 800w before palm folds. lol

Anyone actually believe we will see a "new" palm OS in '08? I'm thinking if they make it we will see something in Feb - Jun '09.

Vote for John Kerry... best man for the job.

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Parsing Mr. Colligan

hgoldner @ 12/18/2007 5:39:15 PM # Q
I seriously hope that the 'operational rigor' he hopes to instill isn't rigor mortis!

Harold

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What a disaster

SeldomVisitor @ 12/19/2007 8:32:54 AM # Q
Some may have noted that, on occasion, I'm somewhat of a PALM-pessimist with some of my posts.

But that earnings call last night set even ME back on my heels.

I totally was expecting, for example, the "guidance" (how the "next" quarter was going to do financially) to be superlative since that Verizon 755p release was pushed into it, thus incrementing its numbers by a significant amount.

Yet PALM said it's going to be a disaster, too!

Can you imagine how bad it would have been if it DIDN'T have the delayed 755p revenues?

And =I'm= trying to imagine WHY it is predicted to be SO bad!

I think perhaps sell-through - or even worse, carrier interest in PALM - fell off the cliff recently for PALM's nonCentro devices (because I can't think of any OTHER good reason for predicted dramatically bad results, can you?).

RE: What a disaster
mikecane @ 12/19/2007 10:08:48 AM # Q
It's easy to understand why next quarter will be a disaster too.

This is the FINAL quarter Palm will sell PDAs.

When the current pipeline empties, hasta la PDA. Cue the Fat Lady.

So they will be losing 19% of their income.

Dumb mofos.

Colligan, now more than ever: **RESIGN**!!!

RE: What a disaster
SeldomVisitor @ 12/19/2007 10:49:14 AM # Q
Yes, that applies to NEXT quarter and could explain some problems for that one - however, my comments were about the CURRENT quarter - the one to be reported next time - that inexplicably is going to be a disaster, too.

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