Palm Reports Q1 FY06 Results

New Palm Inc Logo ~ Click for largerPalm today reported revenue of $342.2 million in its first quarter of fiscal year 2006, ended Sept. 2, up 25 percent from the year-ago period and marking the ninth-consecutive quarter of year-over-year growth.

Net income was $18.2 million, or $0.35 per diluted share. This compares to net income for the first quarter of fiscal year 2005 of $19.6 million, or $0.38 per diluted share, and net income for the fourth quarter of fiscal year 2005 of $17.7 million, or $0.35 per diluted share.

Net income in the first fiscal quarter, measured on a non-GAAP basis, totaled $21.1 million, or $0.41 per diluted share, excluding the effects of amortization of intangible assets and deferred stock-based compensation. This compares to non-GAAP net income in the first quarter of fiscal year 2005 of $21.9 million, or $0.43 per diluted share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation.

The company generated $48.5 million in cash and cash equivalents from operations in its first quarter of fiscal year 2006, bringing the total cash and investments balance to $411.3 million at quarter's end. DSO, or days sales outstanding, were 34 days at the end of the quarter compared with 44 days in the year-ago period.

"We're pleased with the company's performance during the quarter," said Ed Colligan, Palm president and chief executive officer. "Treo smartphone sell-through was 470,000 units, which reflects an increase of more than 160 percent from the year-ago period. Our share in the handheld-computer market rose, and we're excited about our overall product roadmap."

Q2 Fiscal Year 2006 Guidance
In its pending conference call to investors today, the company will provide forward guidance for the second quarter of fiscal year 2006. The quarter's guidance includes the following:

  • Revenue is expected to be between $435 million and $440 million;
  • Gross margin is expected to be in the range of 30.0 percent to 30.5 percent;
  • Operating expenses on a GAAP basis are expected to be between $100 million and $102 million, and, on a non-GAAP basis, operating expenses are expected to be between $97 million and $99 million; and
  • If the company's results for the second quarter of fiscal year 2006 are as planned, it is likely that the deferred tax asset valuation allowance will be released. If this occurs, it would result in a one-time benefit to the tax provision of approximately $240 million to $250 million, the company's effective tax rate would also change to 40 percent for the second quarter and the remainder of fiscal year 2006. Should the deferred tax asset valuation allowance be released in the second quarter, the company anticipates that earnings per share for the quarter on a GAAP basis will be in the $5.00 to $5.20 range and, on a non-GAAP basis, in the $0.38 to $0.43 range. If the company does not reverse the deferred tax asset valuation allowance during the quarter, the tax provision for the quarter is expected to be in the range of $3.0 million to $3.2 million with earnings per share on a GAAP basis, of $0.55 to $0.60 and, on a non-GAAP basis, of $0.60 to $0.65.

Article Comments

 (10 comments)

The following comments are owned by whoever posted them. PalmInfocenter is not responsible for them in any way.
Please Login or register here to add your comments.

Start a new Comment Down

TREO will not save PALM

SeldomVisitor @ 9/22/2005 4:44:42 PM # Q
Nice ring to that, eh?

RE: TREO will not save PALM
JarJar @ 9/22/2005 5:48:28 PM # Q
Agreed.

However, in the short run the Win Treo will probably do okay by milking the name recognition of that little Palm logo and Ed Cooligan and his buddies will congratulate themselves for their "success".

Making a Win Treo simply isn't innovative. These guys just won't innovate--they are only looking to do the things that give the appearance of success. They only need the appearance of success to make it through to the next quarter and keep their salaries.

RE: TREO will not save PALM
SeldomVisitor @ 9/22/2005 6:33:43 PM # Q
It should be noted, though, that the "windows Treo" won't be making any money for PALM for at LEAST a quarter or two - they unambiguously said only the TREO 650 would be a revenue smartphone this quarter.

RE: TREO will not save PALM
arp @ 9/27/2005 6:03:24 PM # Q
One would think that contracts from businesses who have all their internal apps on winmob but are buying the WM treo will bring in a nice chunk of cash, no? Or did they have an extreme amount of money put into R&D on it? How hard can it be to slip in a new 240x240 screen and swap out the OS? Sure, there may be some hardware problems when you swap the OS, but they're a hardware company and should be able to take care of such things fast enough.

I suspect the majority of the spending they have to recoup is just huge salaries to phb's and other people who had to sit in meetings and waste time.

--
http://www.arpx.net/article.php/top_10_palmos_applications - my top 10 palm apps

Reply to this comment

Hammered in AH!

just_little_me @ 9/22/2005 6:59:11 PM # Q
Wow - checkout the after hours trading... $29... ouch.


JLM.

Reply to this comment

30% gross margin!

Timothy Rapson @ 9/22/2005 8:46:32 PM # Q
What in the world does Palm do with all that money? They make 5 times the gross margin Dell does and yet their balance sheet shows 35 cents on a share of stock?! Someone is syphoning money out of Palm like a vampire sucking blood out Jamie Lee Curtis in a B horror flick.

RE: 30% gross margin!
Gekko @ 9/22/2005 8:56:00 PM # Q

coke and hookers?



RE: 30% gross margin!
hkklife @ 9/22/2005 9:17:14 PM # Q
Suits woven with gold thread?

Licensing agreements with Michael Jordan & Claudia Schiffer?

Indirectly bankrolling the publicity campaign for a major motion picture featuring an outdated handheld plastered on lobby posters in cimemas worldwide?

Buying back a name they never should have let go of in the first place?

Sounds like they are stashing all of their cash away to make them look like a ripe, juicy acquisition target (ala Atari etc).

Reply to this comment

Palm merging Zire & LifeDrive lines?

hkklife @ 9/22/2005 10:08:32 PM # Q
Hmmm, sounds like they might unify all traditional PDAs under one line (no cameras, T & Z designations) and then just have cameras in the Treos and a future LifeDrive. As I suspected, the next LD will likely be similar to this one but with bug/speed fixes and 2 extra gb of storage. The NEXT LD after that should be when things may start to get interesting, assuming Palm can hang in there long enough to get it out in a bug-free state.
*************************************************************
(Excerpted from Cnet.com article)
http://tinyurl.com/br7kl

"Palm said its LifeDrive devices and Tungsten and Zire handhelds did not perform as well as Palm had hoped. The company blamed the drop in shipments of as much as 22 percent on a slow sales in Europe over the summer, lagging sales in the Asia-Pacific region and a general decline in the demand for PDAs.

Colligan promised to improve video playback and camera capabilities on future models of the LifeDrive."



RE: Palm merging Zire & LifeDrive lines?
SeldomVisitor @ 9/23/2005 6:57:45 AM # Q
The LifeDrive was and will be dead on arrival - its zero-wait death was widely discussed at release time.

Reply to this comment
Start a New Comment Thread Top

Account

Register Register | Login Log in
user:
pass: