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Palm Q3 Revenue Down 38%

3/22/2002 09:11:00 AM Eastern

Santa Clara, Calif. - Palm reported revenue of $292.7 million in its fiscal third quarter, down 38 percent from the $470.8 million recorded in the year-ago three months, but up 1 percent from $290.6 million reported in the preceding fiscal quarter.

Palm took a pro forma net loss of $14 million in the third quarter, ended March 1, excluding one-time events and restructuring charges. This compares with net income of $9.3 million in the same quarter in 2001 and a loss of $36.6 million in the second quarter of the current fiscal year.

Palm had struggled in 2001, faced with increasing competition and a price war, but demand for new products has helped the company enjoy its third consecutive quarter of revenue growth.

'Tangible progress across virtually every aspect of our income statement and balance sheet gives us increased confidence in our ability to execute and to return to profitability,' said Eric Benhamou, chairman/CEO.

Actual net income for the third quarter was $2.9 million, compared with a net loss of $1.9 million year over year, and a net loss of $25.2 million in the second quarter of the current fiscal year.

Palm said in had an 8.6 percent increase in pro forma gross margin, to 29.1 percent, in line with previous guidance of 28 percent to 30 percent. The company shipped 1.3 million Palm-brand handhelds during the quarter.

For the nine months, Palm recorded revenue of $797.5 million, down from $1.4 billion in the same period the previous year. Pro forma net loss for the third quarter was $89.3 million, compared with net income of $60.7 million in the same nine months a year earlier. Actual net loss totaled $54.7 million for the nine months, compared with income of $35.6 million year over year.

The company supports previous guidance for revenue of $290 million to $300 million in the current quarter.

Palm reported revenue for its software group, PalmSource, for the first time. This group, which handles the Palm operating system and licenses it to other handheld makers, posted $19.5 million in revenue for the third quarter. Its pro forma operating loss was $1 million for the period. Palm plans to spin off this platform group by the end of 2003.

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