Palm Inc Reports Higher Revenues

Posted By: Ryan Thursday, September 18, 2003 5:14:12 PM

Palm, Inc. today reported revenues of $177.4 million for the first quarter of fiscal year 2004, ended Aug. 29, 2003, up 3.0 percent from the $172.3 million reported during the comparable quarter a year ago. The company expects future growth and demand for handhelds in the coming months.

For the first quarter of fiscal year 2004, net loss, in accordance with generally accepted accounting principles (GAAP), was $21.7 million, or 74 cents per share. This net loss included restructuring charges of $2.7 million, amortization of intangible assets of $0.3 million and separation costs associated with the pending spin-off of PalmSource of $1.9 million. This compares to a GAAP net loss for the first quarter of fiscal year 2003 of $258.7 million or $(8.93) per share.

PalmSource
PalmSource continues to improve their financial performance. The division had revenues of 17.1 million, a 17% growth over the quarter last year. 52% of licensee revenue came from other licensees other than the Palm Solutions Group. PalmSource continues is 90% gross margin percentage, consistent with the same quarter last year.

Approximately 1.2 million Palm Powered handhelds were shipped in the quarter, bringing the total number shipped to date from all Palm OS licensees to 30.1 million.

Palm Solutions Group
In the quarter Palm SG shipped over 645,000 handhelds. The average retail selling price of all devices was $231. The revenue growth is due to stronger demand for handhelds and represents a 14% year over year growth.

The highest selling Palm branded handheld was the Zire 71, followed by the T2, TC and the original Zire. The company had is strongest year over year growth in Europe, where demand for the Tungsten T2 was strong. Palm Sg had an average 28% gross margin on all handhelds sold this quarter.

"Palm Solutions Group and PalmSource demonstrated continued strong execution," said Eric Benhamou, Palm, Inc. chairman and interim chief executive officer. "Each business posted year-over-year revenue growth. We improved our gross margin, strengthened our balance sheet with an increase in our cash balance and managed our inventory to 20 turns. As we look to the near and medium term, we notice many indications of a new growth wave in the making for the mobile device industry."

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Way to go

hoodoo @ 9/18/2003 5:53:44 PM #
Me first! :)

Way to go, should be a good 2nd quarter leading into Cristmas season with good products coming out.

Maybe my Handspring shares will finally be worth something post-merger. :)

RE: Way to go
chinchorrero @ 9/18/2003 6:22:32 PM #
Palm is back.

"Life is Too Short"
RE: Way to go
orol @ 9/18/2003 8:44:04 PM #
since there is realle almost no competition for palm SG/palmOne in low and mid range handhels and unless sony will shelf something really good handhelds for low and mid range segment, palmOne will do extraordineraly good this year

actually this year sony focused heavily on hi-end devices what was mistake since there are SO many users having palm os4 devices like clie T series / SJ series and m1xx series and m5xx series on palm side, these people want upgrade, but don't want to spent $500+ for their upgrade ..
and except for sony TG50 what is actually great device but with very less promotion sony didn't introduce any really affordable palm ( I don't take SJ33 for serious in times when zire71 hit the street)

Palm is Dead!

Mr T @ 9/18/2003 7:46:38 PM #
The PPC crowd is too quiet, so I thought I'd keep their hopes and dreams alive by declaring "Palm is Dead!" as they usually do after any good news about palm.

I can't wait for the T3...

RE: Palm is Dead!
hotpaw4 @ 9/18/2003 8:11:42 PM #
Palm SG sold 645k units in fiscal Q1. Since the average price was above $200, most of them were not just Zire/m150's. Didn't someone here predict that Dell would be selling more units than Palm SG by the end of 2003?

It also looks like around 1.1 million total PalmOS units (all licensees combined) were sold last quarter.

I am reminded of the next-to-be victim in the middle of a cannonical horrer movie; you know, the one who says "well now the creature/monster is finally dead". Whoops!

RE: Palm is Dead!
HandyMan @ 9/18/2003 10:33:18 PM #
It usually takes Microsoft three tries to take over something. By accounts, they've used up their three strikes. Renaming WinCE to PocketPC to Windows Mobile 2003 doesn't make it a different "try".


RE: Palm is Dead!
guesswho @ 9/18/2003 10:57:22 PM #
By mid next year PPC will have the same market share as POS. 51 vs 35 now.

RE: Palm is Dead!
helf @ 9/18/2003 11:51:45 PM #
"By mid next year PPC will have the same market share as POS. 51 vs 35 now."

LOL...

RE: Palm is Dead!
hotpaw4 @ 9/19/2003 5:34:12 AM #
> It usually takes Microsoft three tries to take over something.

If you go back to "Pen Windows" (1991) and "WinPad", etc., they are well past 3 tries.

RE: Palm is Dead!
a3 @ 9/19/2003 7:47:50 AM #
I duly agree with the ones cheering Palm! now I understand why Fidelity bought all those shares early on.

Anyway, what is LOL? I could easily figure out IMHO and FYI but Ihaven't been able to get LOL.

____________________________________________
Former Tapwave's Helix fan, now a T|T3 fan.

RE: Palm is Dead!
helf @ 9/19/2003 8:42:03 AM #
laughing out loud or lots of laughs..

RE: Palm is Dead!
guesswho @ 9/19/2003 9:22:05 AM #
helf @ 9/18/2003 11:51:45 PM
"By mid next year PPC will have the same market share as POS. 51 vs 35 now."
LOL...


PDA market is not expected to grow faster than the number of PDA PPC and POS are putting out into the market. Palm has been consistently loosing marketshare, while PPC gaining at steady clip. The parity number is based on hord of cheaper than POS sub $199 PPC going to be introduced late this fall. So yeah... Look for 45%-45% market share or near this number between christmast to early summer next year.

RE: Palm is Dead!
a3 @ 9/19/2003 9:30:54 AM #
Helf: Thanks a lot. I would've never figure that one out.

Ska: If Palm is consistently losing market share as per your comment, how can they report a steady improvement in their fiscal figures?

For the next few months don't forget the impact of the Garmin PDA+GPS, the Sony UX series, the Tapwave Zodiac and the new palms... at least you can grant me that Palm OS has a (by far) more diverse offer. Or are you son biased by M$...



____________________________________________
Former Tapwave's Helix fan, now a T|T3 fan.

RE: Palm is Dead!
hoodoo @ 9/19/2003 10:18:31 AM #
You guys are funny. As the market (any market) matures, more and more companies enter, competition ensues, and it's a see-saw battle for market share, while overall sales for everybody are climbing.

The initial successful entrant into the market will have huge growth numbers that slow over time, in percentage terms, unit sales may still be ramping up. A successful new entrant (PPC) will start to show higher growth numbers as well and increase its market share, and spurn the original entrant on to better products (Palm).

To me it looks like there's room for both, and more, players in the future. Ironically, P1 is more or less taking the path originally taken by the PC market or VHS (open architecture or licencing) while PPC is fairly closed (like Apple or Beta). Which method has proven more successful?

RE: Palm is Dead!
arielb @ 9/19/2003 11:13:05 AM #
I can always count on guesswho for a good laugh!

PPC had its chance when palm was stuck on dragonball and low res/black and white. Those days are ancient history now

PocketPC is dead

grg @ 9/18/2003 11:08:44 PM #
Not that I really care.

RE: PocketPC is dead
posterboy @ 9/20/2003 7:31:49 AM #
Its actually officially dead, coz its now called Windows Mobile 2003! LOL

Got Palm? Don't keep it, flaunt it!

T2 the second highest sell ?

Sky @ 9/19/2003 7:07:42 AM #

I just wonder if it's not a mistake, as it seems unlickely for me that such a new product would oversell the TT ? And that would also mean the TT did not sold well.

Just wondering....

RE: T2 the second highest sell ?
scyber @ 9/19/2003 2:29:42 PM #
2nd highest seller in the last quarter. Not overall sales.

RE: T2 the second highest sell ?
Sky @ 9/20/2003 7:43:10 AM #
Ooops, didn't read carefully enough. Thanks.

I don't get it

hoodoo @ 9/19/2003 8:52:34 AM #
While it's interesting that they report the total number of Palms shipped, ever, why do we need or want to know this? How many of these are still being used?

It's not like they report 12 million cars sold in the USA this year, adding to a grand total of 1.3 billion (whatever the number may be) cars ever manufactured.

On second thought, I suppose Ford, VW, and Toyota do get excited when they make their millionth Model T or Golf or Corolla.

RE: I don't get it
macshimidh @ 9/19/2003 11:15:43 AM #
Let's say you're a software developer who is considering porting one of your applications to a handheld. These figures give you a rough idea of your potential customer base for reach platform. And vbelieve it or not, there are still many original Pilots in circulation. They tend to get handed down rather than retired.
RE: I don't get it
arielb @ 9/19/2003 11:15:50 AM #
hint: Developers developers developers developers!
http://artists.iuma.com/IUMA/Bands/Digital_Droo/

RE: I don't get it
hoodoo @ 9/19/2003 1:26:39 PM #
Ok, ok...I get it now. :)

Thanks

Wow!

mikecane @ 9/19/2003 5:25:48 PM #
"For the first quarter of fiscal year 2004, net loss, in accordance with generally accepted accounting principles (GAAP), was $21.7 million, or 74 cents per share [... versus...] a GAAP net loss for the first quarter of fiscal year 2003 of $258.7 million or $(8.93) per share."

That is one hell of an improvement.



RE: Wow!
Jacques T @ 9/19/2003 10:54:50 PM #
It is indeed "on helluva an improvement".

I expect the Oct 1 PDAs to really help Palm get back into the black. The low end low cost models will be very popular. The Tungsten 3 will fight the HP 2210 which is selling like crazy. I pray that the Tungsten 3 is 400mhz.

RE: Wow!
guesswho @ 9/19/2003 11:56:57 PM #
Except Dell will introduce new sub $199 model, HP introduce super thin dual wireless and keyboarded model, and Toshiba new 4 inch VGA screen with wireless and dual slots.
RE: Wow!
posterboy @ 9/20/2003 7:34:34 AM #
Stick your Dell into your nose coz T3 will be of the same specs with TC (without even to mention the transformable transflective 320x480 screen resolution). T for "transformable" now makes sense in every angle of the word (collapsable design + virtual G2). Hell yeah!

Got Palm? Don't keep it, flaunt it!
RE: Wow!
guesswho @ 9/20/2003 11:13:14 AM #
T|T3 is dead in enterprise market. It has no WiFi capability at $399. At best it will attract loyal Palm user looking to upgrade their old T|T.

Tungsten model has been dead in the water since introduction, It can't compete in mid range.

And now Zire 71 is under direct treat form V36 ($199, built in camera) and X3 ($150 thin low end)

TT3, Z21, and TE are odd upgrade. Those have no wireless(WiFi), mediocre pricing, under spec.

RE: Wow!
Sleuth255 @ 9/20/2003 11:28:10 AM #
jeez ska, you said the T2 would be dead before it was released yet it's the 2nd strongest seller for P1.

You should stop smoking the whacky-tobacky. Reality isn't bearing out your predictions.

50/50 split between Palm handhelds and PPC by next year? lololololololololol!

RE: Palm Envy from PPC Fanboy
mikecane @ 9/20/2003 11:39:25 AM #
That dripnose ska touts the 480x640 Toshi -- what'll that cost, beanhead, $500 to $600? And it uses a screen that native PPCOS does *not* support? Face it -- Toshiba is just trying to copy Sony. All of us with Palms will have a great deal of fun seeing how many apps crash or look strange on that Toshi.

And stop touting the ViewSonic and hp 19xxs. Neither will have screens as good as the TT3. And let's see how many people wail over that 4xxx with BT & WiFi -- when they discover the bottom connector *still* can't be used with a keyboard!

RE: Wow!
guesswho @ 9/20/2003 11:49:21 AM #
POST DELETED - MISINFORMATION
RE: Wow!
mikecane @ 9/20/2003 5:07:37 PM #
Aw, his posts are *always* filled with misinformation.

That'll probably be his next handle: Miss Information!

RE: Wow!
indesman @ 9/21/2003 5:35:44 PM #
I'd like to see his deleted post reposted so we can all see what misinformation he's spreading. Ska's a lot like Bill Clinton, no matter how many times you push his head under water he just keeps poping back up.

PPC vs Palm Profit Questions?

Timothy Rapson @ 9/20/2003 7:59:43 AM #
Every quarter it is the same story. Palm is losing, or making very little profit. Their sales have stagnated. I believe they are running up against the cell phone, and just can't compete with the phone service contract subsidies. PPC continues to gain here 3%, there 8% per quarter.

What I really would like to know is whether the $200 sales are really making any money for anyone on the PPC side. They are certainly costing Palm OS makers market share. Why are Dell, Toshiba, and HP selling these models at no profit? Why don't they join the Palm OS and sell Palm OS models with similar specs at no profit? Palm says it in enjoying a gross margin of 28% on their average sale. Dell pays WisTron $170 for each low end Axim and usually sells it for $175. If they did exactly the same for a Palm OS model I would buy one for each member of my family. I saw an HP 1910 for sale yesterday at BuyDig for $226. Shipping was free and after rebate that is $176. 64 MB, full multimedia, nice color, tiny, swappable battery. What kind of ARM Palm can you get for that?

Dell executives recently said they were astounded at the profit margins on handhelds compared to desktops. Again, Dell, Emachines, and finally HP, are selling desktops at virtually no profit. Like grocery stores their margins are 2-3%. Why is Palm's margin 28% and how do they still manage to show losses overall?


I don't know whether I am more mad at the Palm OS makers for not competing on price or more perplexed by all the PPC makers increasing production in the face of selling each model with no profit or even a loss.

RE: PPC vs Palm Profit Questions?
Gekko @ 9/20/2003 8:41:27 AM #
1. your Dell cost numbers may be incorrect. remember the huge volume numbers here. economies of scale. the "direct" dell model.
2. Dell's PDAs are obviously not Dell's main business, just part of an overall one-stop-shopping services/PC-centric strategy.
3. Dell choose PPC because he thinks that's the future of the market and he thinks that's what most of his customers want.

Michael Dell knows what he's doing. He's not 38 and worth $13 Billion for nothing.

http://tinyurl.com/o4m1



RE: PPC vs Palm Profit Questions?
Sleuth255 @ 9/20/2003 11:31:29 AM #
Duh!

Why the merger??? Can you say "converged devices"? The Treo 600 is only the beginning. Next generation will be running RIM software btw. Now you can try laughing.

RE: PPC vs Palm Profit Questions?
mikecane @ 9/20/2003 11:44:30 AM #
>>>consider the Handspring aquisition, nobody can figure out why that is good fo the bottom line.

-- no, ska, *everyone else* has figured it out. Just *you*, you dope, can't. When will you go away? Can you promise us to contract SARS this winter?

RE: PPC vs Palm Profit Questions?
guesswho @ 9/20/2003 12:05:55 PM #
POST DELETED - MISINFORMATION
RE: PPC vs Palm Profit Questions?
The Ugly Truth @ 9/20/2003 2:48:52 PM #
1. your Dell cost numbers may be incorrect. remember the huge volume numbers here. economies of scale. the "direct" dell model.
2. Dell's PDAs are obviously not Dell's main business, just part of an overall one-stop-shopping services/PC-centric strategy.
3. Dell choose PPC because he thinks that's the future of the market and he thinks that's what most of his customers want.

Michael Dell knows what he's doing. He's not 38 and worth $13 Billion for nothing.

Everything you wrote is correct. In addition, Microsoft leveraged its (uneasy) relationship with Dell in an attempt to legitimize the PPC platform and solidify its presence in the business world.

Microsoft + partners will simply buy marketshare, damage Palm and then raise prices once PPC has become the dominant OS. What is occurring now - subsidization of hardware - can best be viewed as an "investment" in the future. This shows the type of long range thinking that until recently Palm seemed incapable of. The type of thinking that allows companies to sustain their revenue streams.


Sometimes the truth just isn't pretty™

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