Comments on: palmOne Reports Q2 FY'04 Results

palmOne, which consists of the former Palm, Inc. Solutions Group business plus Handspring, today reported revenue of $271.2 million for the second quarter of fiscal year 2004, ended Nov. 28, up 5 percent from the $257.9 million reported during the second quarter a year ago.

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Palm-Handspring combined?

rickorbit @ 12/18/2003 2:22:18 PM #

Kewl--am the first one to post here!

The results being up 5% don't seem to necessarily mean that sales are up 5%...maybe I read it too quickly, but it seems to me that sales last year DIDN'T include Handspring, and this year, do. Which would imply that either sales are actually DOWN from last year, or that Handspring accounts for only 5% of Palm sales and they're flat. So which is it? Any thoughts?

RE: Palm-Handspring combined?

Bartman007 @ 12/18/2003 2:36:31 PM #

That's a very good point, also keep in mind the whole Palm --> Palm0ne/PalmSource split. Before the split Palm earned (maybe not substantial, but a significant amount,) of money from liscensing PalmOS. I wish I had to time to take a look at the earnings in more detail, it would be quite interesting.

Peace,
-Bartman007

RE: Palm-Handspring combined?

TooMuch @ 12/18/2003 6:03:31 PM #

The report is good news for palmOne. The report reflects hardware sales promise for the new hardware split and acquisition of Handspring. Thus, palmOne released this early update to get positive press.

RE: Palm-Handspring combined?

EdH @ 12/18/2003 6:33:02 PM #

>The report is good news for palmOne. The report reflects hardware sales promise for the new hardware split and acquisition of Handspring. Thus, palmOne released this early update to get positive press.

You are the only one seeing it this way. Their stock tumbled just over 22% today and shareholders bailed.

Seeing the ASP climb does look like a step in the right direction. The less Zire/Zire21 sales compared to Zire71 and Tungsten the better.

The company is projecting only very *very* slight growth, which is probably the biggest reason the stock sold off today. "Bruner also said she sees fiscal third-quarter revenues in the range of $200 million to $215 million. She said that compares with $198 million in the year-ago period, which excludes the Palm software business that was spun off and complies with generally accepted accounting principles. In the year-ago quarter, it reported combined revenues for its hardware and software business of $209 million."

Their cash flow stinks too. Operating cash flow was a $29M usage. It was helped somewhat by the $16M of cash Handspring had on their balance sheet and $9M they got with an additional issuance of stock, but Palm can only lose cash so many quarters. Even with those cash bumps, they still lost $9M net cash.

"This report is good news for PalmOne?" How so?

RE: Palm-Handspring combined?

RhinoSteve @ 12/18/2003 8:00:50 PM #

It is good because they are solvent and not shrinking while everone else is tanking. That is what's good about it. We are in the middle of an economic recovery and PalmSource and PalmOne are both very good stoke buys in my opinion for a holding of a year.

RE: Palm-Handspring combined?

Vidge @ 12/18/2003 8:01:37 PM #

>The results being up 5% don't seem to necessarily mean >that sales are up 5%...maybe I read it too quickly, but >it seems to me that sales last year DIDN'T include >Handspring, and this year, do. Which would imply that >either sales are actually DOWN from last year, or that >Handspring accounts for only 5% of Palm sales and >they're flat. So which is it? Any thoughts?

Actually, you missed the part about PalmSource's revenues being included in discontinued operations (I know - only a CPA like me would pick up on that). "Accordingly, palmOne results have two months of PalmSource results included in discontinued operations and one month of Handspring results included in income from continuing operations."

Typically, the revenue numbers given only reflect revenues from continuing operations. So this year's revenues DO NOT INCLUDE the revenue from PalmSource for 2 months. If the revenues from PalmSource were included, the percentage increase would be higher. How much higher I don't know. I just looked at the financial statements and they (correctly) reported the discontinued operations as one single line item, net of taxes.

Moderator, Daily Gadget
http://www.dailygadget.com

Smartphone Vs PDAs

ander80 @ 12/18/2003 5:55:27 PM #

does anyone know how much/many of the smartphones have been sold (within PalmOne only) in percentage from that 24.4 million?

what would it be 5% (Treo) versus PDAs (zire, tungsten...) I really dont have a clue, does anyone?

RE: Smartphone Vs PDAs

Michael Mace @ 12/19/2003 11:49:35 AM #

I can't give out sales figures for individual licensees, but as a general guide, IDC estimates that smartphones were 15% of US Palm OS device sales in all of 2003. Remember that the Treo 600 and Samsung i500 were not shipping for part of the year, so I'm sure the percentage will go up in 2004.

Worldwide, the percentage if smartphones in our mix is smaller, because we haven't had a lot of GSM-based devices. But that's changing as well...

Mike
CCO, PalmSource Inc.

RE: Smartphone Vs PDAs

Slam @ 12/19/2003 3:07:07 PM #

During the PalmOne earnings conference call, they claimed to have shipped 48,000 in Q1 and 52,000 in Q2. They claimed that shipments will ramp up substantially in the latter half of Q3. So 52,000 units out of 1.4M is about 4% of units (although about 8% of revenue) with higher margins.

The Treo 600 seems to be supply constraint - but P1 offered no details other than to say the are working the problem. Right now it seems that P1 could sell as many Treo600s as they could manufacture.

While its great that there seems to be strong demand for the Treo 600, it looks like it will carry P1 more in future quarters. PDA Inventories in the channel are high and this will contribute to lower core PDA sales (as P1 ships less into the channel) in Q3.

What happened here (with the stock diving) is that the guidance for Q3 is seriously disappointing if it becomes accurate. P1 FY03Q3 revenues w/o Psrc were $198M (or $209M with). Revenues from Handspring were around $30-40M (their historical Quarters do not line up with P1 so this is an estimate based on their revenues). So analysts were adding 198m to 35m to get their FY04Q3 estimates. Guidance of $200 to $215M in Q3 represents a shortfall of some $20M. Thats huge, and it just seems that it can't be correct if Treo 600 sales ramp up. P1 traditional PDAs would have to decline substantially for this to occur. At a minimum, the numbers for P1 were difficult to figure out b/c of the split.

Its ironic that P1 essentially saved hand from going under by merging. It may be that Hand also saves P1 from going under if the Treo 600 sales ramp up and maintain a high level. Thats what you call a symbiotic relationship.

RE: Smartphone Vs PDAs

ander80 @ 12/20/2003 1:04:48 PM #

symbiotic union indeed... I suposse then that P1 will be selling out more and more, but will ever get number 1 in the market share, competing those like Nokia, motorola?

I know P1 is based more on PDAs than smartphone, but changes are occurring and thus this means that P1 will be manufacturing more of these phones to keep afloat?

will ever get on top of the market???(smartphone, mobile market that is) at least on the top list?

Ander Zabala, MSc Student