Palm Reports Q2 FY06 Results
Palm today reported revenue of $444.6 million in its second quarter of fiscal year 2006, ended Dec. 2, up 18 percent from the year-ago period. Palm CEO Ed Colligan stated in the earnings call that Palm will announce three new smartphones next year, in addition to the Treo 700w.
"Achieving the eighth consecutive quarter of year-over-year double-digit revenue growth and growing our converged device market share to 36 percent in the United States (Canalys) are significant accomplishments," said Ed Colligan, president and chief executive officer of Palm. "We'll roll out the Palm Treo 700w smartphone based on Microsoft's Windows Mobile, and we'll announce three additional new smartphones during calendar year 2006."
Net income was $260.9 million, or $5.02 per diluted share. Net income reflected the effect of a partial reversal of a deferred tax asset valuation allowance of $226.3 million. This compares to net income for the second quarter of fiscal year 2005 of $24.7 million, or $0.48 per diluted share.
Net income in the second fiscal quarter, on a non-GAAP basis, totaled $24.4 million, or $0.47 per diluted share, excluding the effects of restructuring charges, amortization of intangible assets and deferred stock-based compensation, the related income tax provision, and the partial reversal of our valuation allowance against our deferred tax asset. This compares to non-GAAP net income in the second quarter of fiscal year 2005 of $27.2 million, or $0.53 per diluted share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation. Non-GAAP net income in the second quarter of fiscal year 2005 was calculated utilizing a tax rate of approximately 19 percent, compared to the 40 percent tax rate in the second quarter of fiscal year 2006.
"During the second quarter, we added seven new carriers to expand the geographic reach of our products, and for the first time we began selling Treo smartphones in China," Colligan said. "We shipped more than 1 million Treo smartphones during the first half of fiscal year 2006, which is just shy of what we shipped in all of fiscal year 2005. With our strong market position, and excellent execution, I have confidence in our long-term growth opportunity."
Fiscal Year 2006 Third Quarter Outlook
Based on current trends, Palm is providing its outlook for financial results in the third quarter of fiscal year 2006, ending March 3, 2006. At this time, the company expects:
- Revenue in the range of $370 million to $375 million;
- Gross margin between 33.0 percent and 33.5 percent;
- Operating expenses between $100 million and $102 million on a GAAP basis and between $99 million and $101 million on a non-GAAP basis; and
- Earnings per diluted share between $0.46 and $0.49 on a GAAP basis and between $0.31 and $0.33 on a non-GAAP basis, which excludes amortization of intangible assets and deferred stock-based compensation and reflects the difference between utilizing a 40 percent effective tax rate on a non-GAAP basis, compared to approximately 7 percent to 8 percent effective tax rate on a GAAP basis.
During the second quarter of fiscal 2006, the company accomplished the following:
- Announced the development of a next-generation Palm Treo smartphone, the Treo 700w, which will be introduced to the marketplace in early calendar year 2006. This product is based on Windows Mobile 5.0 and runs on the Verizon Wireless EV-DO network;
- Announced the availability of BlackBerry Connect capability in early 2006 for current and future Treo 650 smartphone users with service through certified carriers;
- Opened its European Engineering Centre in Dublin, where engineers will develop custom software for Palm smartphones in close collaboration with mobile operators in the Europe/Middle East/Africa (EMEA) region;
- Expanded business with seven new carriers during the quarter. They are Hutch in India; TIM in Brazil; TELUS Mobility in Canada; Entel in Chile; Alltel in the United States; and Telefonica/movistar and Iusacell, both in Mexico; and
- Introduced two new handheld computers, the Palm TX, featuring integrated Wi-Fi and Bluetooth wireless technologies and a large, high-resolution color screen, and the Palm Z22, an easy-to-use and compact color organizer priced to compete with paper organizer systems.
Article Comments(19 comments)
- I got one -Tuckermaclain
- I got one -Tuckermaclain
- RE: Don't we have this already? -Tuckermaclain
- RE: Palm brand will return in 2018, with devices built by TCL -richf
- RE: Palm brand will return in 2018, with devices built by TCL -dmitrygr
- Palm phone on HDblog -palmato
- Palm PVG100 -hgoldner
- RE: Like Deja Vu -PacManFoo