Handspring Announces Smaller Loss than Expected

When looked at by itself, Handspring's last quarter doesn't look all that great. It posted a net loss of $15.4 million, or 11 cents a share. This is slightly less than what analysts had expected: 12 cents a share. Still, compared to the same quarter last year when the company posted a loss of $67 million, or 60 cents a share, these results start to look almost good. Certainly investors seemed to think so; Handspring's share price went up 12 percent in after-hours trading. This may have been aided by Handspring CEO Donna Dubinsky's prediction yesterday that her company would be profitable by the end of this year.

However, there is some justification for being skeptical about this prediction. Handspring said in January of this year that it hoped to be profitable by the end of last quarter.

Incidentally, Handspring's net loss includes the costs the stock options given to its employees. Excluding these, the company had a loss of 8 cents a share.

Since the Treo line was first introduced earlier this year, 93 thousand wireless Treo models have been shipped to retailers. About 43% of those, or 40 thousand, have actually been sold to customers. During its most recent quarter, which ended June 29, 46 thousand units shipped and 27 thousand were sold.

Sales of the Treo, which are more expensive than many of the company's other models, helped boost the profit margin Handspring makes on each unit to 24.5% from 9.2% last quarter.

Revenues for the quarter dropped about 20% to $49 million from $61 million the same quarter a year ago. Dubinsky predicted yesterday that her company would have revenues of $50 million to $60 million for this current quarter. She sees revenues increasing to $80 million or $90 million in the quarter ending in December, which is when she predicts the company will be profitable.

The company's ending cash and investments balance was $151.4 million, of which $100.6 million was unrestricted.

This was also the end of Handspring financial year. It posted a net loss of $91.6 million compared to $126 million for its last fiscal year.

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Cash burn

I.M. Anonymous @ 7/18/2002 10:38:11 AM #
So at current rates Handspring can go another year on their cash reserves IF Dubinsky's prognosis about profits is "overly optimistic"

Let's hope when OS5 hits the streets they pull out the stops and produce something truly sparkling. Its a shame HS started so well - I owned a visor deluxe and still use my Prism. If they wish to continue as PDA makers, they really need to innovate soon.

I think the most interesting part of the whole article concerns profit margin per unit .... 25% on Treo's! That is something of a gouge if you ask me!

Of course you have to ask why make PDA's with a 9% margin when you can knock out a smart phone with 25%....

RE: Cash burn
Ed @ 7/18/2002 10:48:20 AM #
Keep in mind that when accountants talk about profit margin they don't mean the same thing you might think. As I understand it, anything above the physical cost of making the hardware is "profit". Of course, that ignores R&D, advertising, paying your employees, etc. That's why a company with a 25% "profit margin" can be running in the red.

---
News Editor
RE: Cash burn
I.M. Anonymous @ 7/18/2002 11:15:42 AM #
Yes, but a 24% margin this past quarter signals that the company is on the mend when you compare it to the 9% margin last quarter.

Bottom line with HAND is that there still is no network out there that enables the Treo to be what the Treo is sold as. As soon as Sprint PCS gets going I bet that the prospects for Handspring pick up. Especially when you consider their initial competition for handsets - phone oriented units from Samsung and an option from Audiovox based on Windows CE (read more expensive).

One last thought, Kyocera new unit will be the first test for the Treo but that is not until November. Its been a real long time since Handspring announced an enhanced Treo communicator (doesn't include the 90) line. I'd expect that they'll be taking the wraps off of something between now and the end of the year. One could only hope for an SD slot and hi res screen.

Link to financials

I.M. Anonymous @ 7/18/2002 11:50:27 AM #
Can you add a link to the financials when you post articles like this?
RE: Link to financials
Ed @ 7/18/2002 11:58:36 AM #
Click on the first link under "Related Information" and scroll down to the bottom.

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News Editor

More lies from Donna?

Foo Fighter @ 7/18/2002 11:52:27 AM #
>"This may have been aided by Handspring CEO Donna Dubinsky's prediction yesterday that her company would be profitable by the end of this year."

Hard to believe the stock market would react positively based on anything coming from her mouth. I believe this is her 15th prediction, so far. I would stand a better chance taking stock advice from Miss Cleo. HAND has never posted a profit...and they never will. I'm sorry to say this, but they are nothing more than a waste of good venture cap money. Just like so many other failed dot coms.

At best, they are an acquisition target. Let Qualcomm or RIM (not profitable enough to buy them I'm afraid) purchase them outright. Replace the executive team (including Dubinsky and Hawkins) with more innovative leadership, and play off the brand name.


RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 12:24:23 PM #
AH yes, more HAND bashing from the foo L.
RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 12:29:22 PM #
I have to agree. I don't understand how anyone can call the team that originally came up with the design and software for the palmpilot and then came up with the concept of the treo (a lightweight combination rather than a phone with a to do list or a handheld with an aerial and battery life that only Sony would be proud of) anything less than innovative. Sticking a phone in a PDA may appear obvious now but they were the first. Just like when Sony sticks an MP3 player or a camera (or Handera boosts the resolution and offers a better speaker), that's considered innovation, too.
RE: More lies from Donna?
Foo Fighter @ 7/18/2002 12:59:23 PM #
>"AH yes, more HAND bashing from the foo L.

Wow! An insult from an anonymous poster? How ever will I live with this shame?

>"I don't understand how anyone can call the team that originally came up with the design and software for the palmpilot and then came up with the concept of the treo [snip] anything less than innovative."

First off, the PalmPilot is little more than a footnote to history now. The fact that Hawkins created the original PalmPilot has little relation to today's products. The market has moved beyond the simple electronic organizer. Treo is innovative...but it is not REVOLUTIONARY. More importantly, it isn't turning into the hit that Jeff believed would set the market on fire and save his company. It is a fine product, but its hardly a barn burner.

Handspring was over-hyped. And what became of Dubinsky's claim that her company would one day become the leader of the handheld computing market? Gone, along with the Visor. Big talk from a company that has delivered little, and was out-innovated by the competition. Sony surpassed Handspring as the number 2 handheld maker by adding innovative features that, Hawkins claimed, consumers didn't need or want. Funny that.

>"Sticking a phone in a PDA may appear obvious now but they were the first."

No, they were not. Samsung and Kyocera developed PalmOS hybrid Phone/PDAs long before the Treo arrived on the scene. The Treo just glued a cell phone/PDA/Blackberry together in one package. Innovative, yes. But it's no category killer.

RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 2:24:27 PM #
I don't think Kyocera has much of a WW strategy. 600 million users in the GSM environment and the rest of the work ahead of messaging.. HS has clearly established themselves in a short time as a force to be considered in this environment outside of the U.S. where the real subscriber base exists. Who will buy the 7135 sprint users?
RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 3:43:47 PM #
Foo, I wish I had a penny every time Larry Ellison made an outrageous comment to the media or analysts and they bought it hook, line and sinker. If that were the case, I'd have more money than Ellison.

Forget for a moment that CEO's make odd claims and analysts, being lazy, don't do the research and believe it. Handspring will survive and likely do fairly well. Remember the Treo concept has been with us for about 9-10 months now (at least since it first appeared in the FCC Site). The product around since February-March. That's plenty of time to work on innovation leveraging the core Treo package. They'd be DOA if the did what they (and Palm) used to and that's to announce new products way in advance of the targeted launch. If people knew that a Treo 360 would be out in 3 months and had an SD slot, built in camera, MP3 and other features that have not yet been seen in a handheld who'd be buying their existing products? Plus, what would happen to their value since their existance depends on keeping their margins in the 25-27% range?

The fact of the matter is that nobody is building the ultimate product yet and there are only 1-2 new, innovative, exciting ideas coming out of every new product launch. Let's face it, PDA's because of the maturity of the products and market are slowly becoming more and more like the PC and the PC industry. Can anyone tell the differentating features between a Dell and an HP? The same will soon be true of PDA's. Then again, I could be wrong.

RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 5:20:47 PM #
LoL .. they come up with the idea of Palmpilot, read the book, they came up with the idea of palmpilot after they got a hold of a Sony PDA in Japan.

And clie having poor batter life is because of the screen, they got better resolution, better color, I would gladly give up some battery life for that so my eyes will be more comfortable.

And that phone PDA thingy, it's nothing new.

RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 5:39:17 PM #
What would be a Handspring announcement without our good friend FOO FIghter making a comment about "Handspring is Dead" and "Donna and Hawkins" suck arguement? It is to be expected.
RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 6:57:30 PM #
Right, but I was disappointed that we didn't get to hear Foo's long pontification on how the springboard sucks and why it failed. Actually, I think he should start numbering his Handspring bashing speeches, in that way he could just post #13,17 and 21 for faster reading.
RE: More lies from Donna?
I.M. Anonymous @ 7/18/2002 7:59:52 PM #
Foo Fighter, I wish there was an ignore function. You are a broken record. I you were half as smart as you think you are, you could bring world peace.
RE: More lies from Donna?
Foo Fighter @ 7/18/2002 10:11:32 PM #
>"Foo Fighter, I wish there was an ignore function."

So do I. These anonymous posts are a waste of space.

>"If you were half as smart as you think you are, you could bring world peace."

If your opinion had half the credibility you think it has, we might actually take it seriously.

RE: More lies from Donna?
scottmag @ 7/19/2002 2:02:07 PM #
Foo, it's well documented that you do not like Handspring and think Hawkins and Dubinsky are overrated. How about something new?

"First off, the PalmPilot is little more than a footnote to history now. ... The market has moved beyond the simple electronic organizer."

And you are wrong there. Palm is selling millions of units that are little changed from Jeff Hawkins' orignial vision. They now have color screens and more memory, but are essentially the same as his first Pilot many years ago.

Palm is continually bashed for failure to deliver "revolutionary" (to use your word) changes. But they are delivering exactly what the typical consumer wants and Jeff Hawkins deserves the credit for getting it so right.

Scott

RE: More lies from Donna?
scottmag @ 7/19/2002 2:09:16 PM #
>>"Foo Fighter, I wish there was an ignore function."

>So do I. These anonymous posts are a waste of space.

All right. Now I agree with you. :)

Scott

RE: More lies from Donna?
Foo Fighter @ 7/19/2002 2:15:35 PM #
>"Foo, it's well documented that you do not like Handspring and think Hawkins and Dubinsky are overrated."

I plead guilty! :-P

>"And you are wrong there. Palm is selling millions of units that are little changed from Jeff Hawkins' orignial vision. They now have color screens and more memory, but are essentially the same as his first Pilot many years ago."

True, but neither Palm nor Handspring are making money on these devices. They heyday of the basic organizer is over. More features are coming...it is inevitable.

>"Palm is continually bashed for failure to deliver "revolutionary" (to use your word) changes."

No argument there. I have beaten this company over the head for ages, for not innovating. Palm sat still while Microsoft..and later Sony, stole the momentum.

Now Palm is scrambling to add the very features they claimed didn't belong on a handheld! Ironic, isn't it?

>"But they are delivering exactly what the typical consumer wants and Jeff Hawkins deserves the credit for getting it so right."

I disagree. If they were delivering exactly what the typical consumers want, Palm and HS wouldn't be losing sales and market share. The market has become over-saturated with seemingly identical devices that offer no compelling new features. M505 users aren't very likely to upgrade to an M515. But they may upgrade to a Sony NR70...or perhaps the new OSLO.

However, I do agree that Hawkins deserves credit for making the PalmOS popular. But he did not invent the PDA. And, aside from the Treo, I haven't seen a lot of creative thought coming from HS. Just more of the same.



RE: More lies from Donna?
I.M. Anonymous @ 7/19/2002 3:20:54 PM #
Yippie, Foo you have a very narrow U.S. centric view of the market opportunity. Looks to me like HS is the first company to integrate GSM technology into a smart phone. The future is GSM (someone forgot to tell Kyocera that) and smartphones. I think HS has initiated a reasonable WW opportunity and clear direction for themselves. I wonder how many 9210 Nokia smart phones the wireless giant of the world has sold. Hmmm, palm support, national language support, WW sales agreements. Take your U.S. dunce cap off and see what is going on.

Handspring

Fender @ 7/18/2002 1:39:12 PM #
I for one am fed up with Palm's crappy (to put it nicely) products and support. It's no surprise that Handspring is doing better than expected. This Saturday I'm going to buy a Treo. I HAD planned to buy an m515, but the OS 4.1 upgrade fiasco was absolutely the last straw for me.
Palm didn't give clear instructions as to how to install the upgrade. The instructions indicate a "flashing square box" (when in debug mode), but an m505 has the blue line at the bottom of the screen, not the flashing box. They also fail to inform us that one must delete the password to put it in debug mode. This upgrade has been available for days, and STILL they've made no effort to include this vital information. If they've got time to put irritating pop-up ads on their website, they could surely ammend the instructions for the upgrade.
All of this happened after they'd denied for months that there was a static discharge/hotsync problem. My m505 was fried by the hotsync bug. It wouldn't even reboot and had to be replaced.
And, whenever I had to contact support, they NEVER read my inquiry the first time. They usually answered a question that I hadn't even asked. And, the mere mention of third-party software pretty much will get you nothing from them.
I truly hope the the rumored merger between Palm and Handspring doesn't happen. Palm might just be a bad influence on Handspring.

RE: Handspring
I.M. Anonymous @ 7/18/2002 5:37:54 PM #
Wow. Its very rare I see such negative posts about Palm.
RE: Handspring
I.M. Anonymous @ 7/18/2002 6:09:53 PM #
I bet you (above post) didn't come to this site often. There are lots of negative comments about Palm, Sony, Handspring, and of course, PowerPC!
RE: Handspring
I.M. Anonymous @ 7/18/2002 7:50:32 PM #
Also, dear friends, do not forget that Palm, Sony, Handspring, Microsoft (!), and even HandEra (!!) have their righteous, religious defenders and advocates. The ones who believe that their company of choice can do no wrong; or if they have, that it was no worse than anyone else and that it will be fixed by product X.

PalmInfoCenter is a wonderful website and resource for owners of ALL PalmOS based devices, whether organizers or smartphones, even the forums. Just be warned that in the forums, one may have to wade through some crap to get to the good, useful information. Of course, it's not NEARLY as bad as Slashdot, which goes to show that moderation isn't perfect, either.

--JM

RE: Handspring
I.M. Anonymous @ 7/18/2002 9:59:32 PM #
I don't quite understand what this (the previous post) means:

"Also, dear friends, do not forget that Palm, Sony, Handspring, Microsoft (!), and even HandEra (!!) have their righteous, religious defenders and advocates. The ones who believe that their company of choice can do no wrong; or if they have, that it was no worse than anyone else and that it will be fixed by product X.

PalmInfoCenter is a wonderful website and resource for owners of ALL PalmOS based devices, whether organizers or smartphones, even the forums. Just be warned that in the forums, one may have to wade through some crap to get to the good, useful information. Of course, it's not NEARLY as bad as Slashdot, which goes to show that moderation isn't perfect, either."

Are you saying that one of the previous posts is crap?

Is there a future for Palm OS?

I.M. Anonymous @ 7/19/2002 8:18:54 AM #
Don't misread my subject line. I use and support the Palm platform, but how long can these companies continue to lose money? I am not convinced that either Palm or Handspring will break even over the next couple of years. I can see that intense competition and higher R&D costs will continue to pressure their bottom lines. Eventually, they will run out of cash, at which point, Palm OS R&D will stop and the platform will die. Meanwhile, Microsoft has a ocean of cash to prop up theirs. Where is the future?

Palm Stock up 3% amidst all of this carnage today

I.M. Anonymous @ 7/19/2002 6:06:12 PM #
Dow down almost 400 points yet Palm is up nicely. What's going on??????????
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