PalmSource Reports Fiscal First Quarter Results

Posted By: Ryan Thursday, September 22, 2005 10:42:45 AM

PalmSource Logo PalmSource today announced results for its fiscal first quarter ended September 2, 2005. Revenue for the first quarter of 2006 was $15.8 million, as compared to $18.2 million reported in the year ago quarter. Gross margin was 93 percent, roughly flat with the year ago quarter.

GAAP net loss was ($2.0) million or ($0.12) per share, as compared to a GAAP net loss of ($0.2) million or ($0.01) per share reported in the year ago quarter.

Non-GAAP net income for the quarter was approximately $0.2 million or $0.01 per share, as compared to non-GAAP net income of $0.8 million or $0.06 per share in the year ago quarter. Non-GAAP net income and EPS for the first quarter of 2006 excluded approximately $1.5 million for stock-based compensation expense, $0.5 million for costs associated with the Company's merger agreement with ACCESS Co., Ltd., (Tokyo Stock Exchange: 4813) announced on September 8, 2005 and $0.2 million for amortization of purchased intangible assets.

During the first quarter, PalmSource executed on its previously announced restructuring plan in its product development and sales groups and implemented the cost cutting initiatives designed to improve operating performance. This led to reduced operating expenses and contributed to sequentially higher operating margins when compared to the fiscal fourth quarter of 2005.

GAAP loss per share for the first quarter of 2006 was calculated using basic shares outstanding of 16.1 million, while non-GAAP EPS were calculated using diluted shares outstanding of 16.2 million shares. GAAP loss per share for the first quarter of 2005 was calculated using basic shares outstanding of 14.3 million shares, while non-GAAP EPS were calculated using diluted shares outstanding of 14.5 million shares.

Palm OS licensees reported shipping a total of approximately 1.2 million units during the quarter, of which 44 percent were smartphones or wireless handhelds and 56 percent were traditional PDA's and other mobile handheld devices. This compares to a total of approximately 1.4 million units shipped in the first quarter of fiscal 2005, of which 21 percent were smartphones and 79 percent were PDA's and other mobile handheld devices.

Due to the recently announced expected acquisition of PalmSource by ACCESS Co., Ltd., PalmSource will not be holding a quarterly earnings conference call.

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What's Access's debt?

Sam H @ 9/22/2005 2:10:36 PM #

Does anyone know how much Access had to borrow to buy PalmSorce?

RE: What's Access's debt?

SeldomVisitor @ 9/22/2005 2:33:58 PM #

Gonna be a lot more after acquiring PSRC, that's for sure!

Was a Head Scratcher of a deal - even more of a Head Scratcher now.

Despite Treo PALM sales flat

sr4 @ 9/22/2005 2:56:09 PM #

Assuming Palm is now 90% of POS sales, their sales in total have not increased much year on year. They have however managed to transition from PDA's to higher margin treo's very well.

Some numbers.
Palm(one) Q3 2004
1076470 total sales

Palm Suggested Q3 2005 numbers (estimated)
1080000 total sales (virtually identical)
475200 Treo's
604800 Handheld PDA's

There may have been a small quarter on quarter gain in Palm's favour, but year on year they are down. This also put paid to the myth that millions of PalmOs handhelds are selling in Asia (which makes the Access purchase even more mystifying)

Surur

RE: Despite Treo PALM sales flat

SeldomVisitor @ 9/22/2005 4:05:13 PM #

Why, when PSRC said in their couple-months-ago Annual report that PALM was 65% of revenue, would you believe PALM is now 90%?

RE: Despite Treo PALM sales flat

sr4 @ 9/22/2005 4:29:59 PM #

Canalys numbers for PalmOne Q2 2005

http://blogs.zdnet.com/ITFacts/?p=8586

http://blogs.zdnet.com/ITFacts/?p=8569

Palm devices sold Q2 2005
1,057,420
PalmSource Licenses sold Q2 2005
1,157,720

Thats 91.3% of POS sales being to P1 in Q2 2005. Its obvious they make a lot of their revenue a) from the sale of their name and b) from mandatory license fees from companies who are not shipping any devices (e.g. Sony). But you are right that Palm's numbers would be marginally better if I assume they are now shipping 100% of PalmOS licenses.

Surur

RE: Despite Treo PALM sales flat

sr4 @ 9/22/2005 5:07:06 PM #

"We're pleased with the company's performance during the quarter," said Ed Colligan, Palm president and chief executive officer. "Treo smartphone sell-through was 470,000 units, which reflects an increase of more than 160 percent from the year-ago period. Our share in the handheld-computer market rose, and we're excited about our overall product roadmap."

http://www.palminfocenter.com/view_story.asp?ID=8076

This number actually matches my calculations from earlier, which confirms that they sold about 600 000 PDA's also.

Surur