Palm Announces Severe Revenue Shortfall, Big Loss
Palm Inc. said today that it expects revenue for its current financial quarter to be roughly half what it had previously expected. The company estimates revenue will be between $140 and $160 million, compared to its previous estimation of $300 to $315 million. This means the company is now expecting to lose between $170 and $190 million this quarter, compared to the $80 to $85 million it had previously thought. Inventory problems also mean Palm will take a $300 million charge.
This announcement came after the major markets had closed. Shares fell to an all-time low of $5.47 on very heavy volume in after-hours trading.
For comparison, the company reported revenues of $350 million in the same quarter last year and $471 million last quarter.
Palm's CEO gave this explanation, "Our new m500 family of handheld computers is shipping in volume later than we had hoped, precluding the opportunity for distributors, retailers and resellers to reorder in our fourth quarter. In addition, we believe that this delay stalled sales of our existing products in all regions. The shipment delay accounts for the bulk of our reduced revenue outlook and is exacerbated by the slowing economy, which we believe has spread beyond the U.S. In response, we are offering more attractive pricing and promotions on our existing products than we had previously anticipated."
Palm's CEO also said that all the news wasn't bad. They have resolved the problems causing the volume shipment delay and begun shipping the m500 series outside the United States. They expect to have it available in all major markets by the end of June.
They also report positive initial U.S. retail sell-through data on their new products and that several surveys indicate that Palm branded and Palm Powered devices continue to hold or increase Palm's leading share of the handheld market.
In related news, Palm and Extended Systems announced today that they have agreed to cancel their proposed deal for Palm to acquire the mobile infrastructure developer.
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