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Palm Fiscal Q4 Revenue Climbs 41%, Reports Loss

6/26/2002 09:17:00 AM Eastern

Santa Clara, Calif. - Handheld computer manufacturer Palm reported a 41 percent jump in revenue for its fiscal fourth quarter, hitting $233.3 million, compared with $165.3 million in the year-ago three months.

Palm, however, recorded a net loss, as measured by Generally Accepted Accounting Principles, of $27.5 million in the fourth quarter, ended May 31. This was down from a net loss of $392.1 million in the same quarter in 2001.

On a pro forma basis, Palm's net loss was $17.8 million for the fourth quarter. This figure excludes one-time events and $20.6 million in restructuring charges, and compares with a pro forma net loss of $89.2 million in the same three months last year.

Citing a down market, Palm still said it was able to grow pro forma gross margin to nearly 35 percent, keep inventory levels within expected parameters and maintain leading market share.

Palm, after warning in May of weaker-than-expected sales in the fourth quarter, down from an earlier predicted range of $290 million to $300 million for the fourth quarter, said current first quarter revenue should be in the range of $175 million to $185 million.

The company expects a loss in the current quarter, but that it would break even in the second quarter, based upon the addition of new products and ongoing cost controls. Its pro forma operating loss for the current quarter is expected to be in the range of $40 million to $45 million.

Part of Palm's turnaround strategy is the spin-off of its operating system software division, PalmSource, which reported fourth quarter revenue of $18.7 million, compared with $21 million in the fourth quarter of 2001. Operating loss for PalmSource in the fourth quarter was $1.4 million, compared with $4.6 million in the same quarter last year.

For the 12 months, Palm revenue was down 34 percent, to $1 billion, compared with $1.6 billion in the year-ago 12-month period. Projected revenue for the current fiscal year is $1 billion.

Actual net loss for the fiscal year was $82.2 million, compared with a net loss of $356.5 million in fiscal 2001. Pro forma net loss for the 12 months was $107.1 million, compared with a pro forma net loss of $28.5 million year over year.

Palm, which is looking forward to healthier financial results this fiscal year, is optimistic about stronger demand for new handhelds with multimedia features, which will be available later in 2002. To date, the company said 18 million Palm-brand handhelds have been shipped, while 23 million units using Palm software have been shipped.

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