PalmSource Announces Layoffs, Revenue Flat

Sunnyvale, Calif. — In a flurry of activity that included the reorganization of its sales, marketing and product development activities, PalmSource, a developer of software for mobile phones and other mobile devices, reported relatively flat revenue for its fiscal fourth quarter.

Revenue dropped to $17.3 million in the three months, down from a year-ago $17.6 million,

And the company said it plans to reduce full-time head-count by about 16 percent in the United States, while it has taken a $2.7 million restructuring charge in the fourth quarter, ended June 3.

The company recorded net income of $18.3 million in the quarter, compared with a loss of $2.9 million the previous year. However, the bulk of the quarterly improvement can be attributed to a $26.7 million gain on the sale of the company's interest in the Palm-name trademark to palmOne, which secured the rights because it plans to change its name to Palm later in the year.

Operating loss for the fourth quarter rose to $8.9 million, compared with a loss of $2.3 million in the same period last year. Gross margin reached 93 percent in the fourth quarter, up from a year-earlier 91 percent.

PalmSource shipped about 1.1 million units in the fourth quarter, of which 37 percent were smartphones and 63 percent PDAs. This compares with 1.4 million units shipped in the same three months in 2004, of which 18 percent were smartphones and 82 percent PDAs.

Twelve-month revenue slipped to $71.9 million, down from a year-on-year $73.1 million. Net income for the fiscal year reached $19.5 million, compared with a $15.2 million loss the previous 12 months. The increase includes the $26.7 million trademark sale gain. Operating loss for the 12 months dropped to $10.2 million, down from a year-earlier loss of $12.8 million.