Palm Q2 Revenue Drops 44%

Santa Clara, Calif.— Handheld computer provider Palm reported revenue of $290.6 million for its fiscal second quarter, down 44 percent from the $522.2 million recorded in the same three months last year.

The current revenue figure is a "significant increase" over the $214.3 million registered in the first quarter — up 36 percent — according to Palm. It "reflects that we have gained traction in the marketplace and restored operational rigor," chairman/CEO Eric Benhamou said.

Palm recorded a pro forma net loss — which excludes restructuring charges and other items — of $36.6 million, compared with pro forma net income of $27.5 million for the same quarter last year.

Actual net loss for the second quarter was $25.2 million, compared with net income of $20.3 million in the second quarter of last year.

"We have a tightly focused strategy. We are growing again, and we believe we can execute our plans on time and within budget," Benhamou said. Palm, which makes personal digital assistants, has been struggling to regain profitability. The company has been hard hit by both the economic slow down and a drop in demand for its product, leading to a 16 percent cut in its workforce last year.

Looking ahead, the company said it expects revenue of $250 million to $260 million in its fiscal third quarter ending in February and $290 million to $300 million in its fourth quarter.

For the first six months, revenue dropped 45 percent, to $504.9 million, compared with $923.2 million in the same period in 2000. Pro forma net loss for the first six months was $75.3 million, down from pro forma net income of $51.4 million in the same period last year.

Actual net loss for the six months was $57.6 million, compared with net income of $37.5 million in the first six months of the past fiscal year.