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Palm Reports Big Loss On Charges, Q4 Revenue Of $165 Million

6/27/2001 10:25:00 AM Eastern

Santa Clara, Calif., - Palm Inc. yesterday reported revenue of $165.3 million for its fourth quarter of fiscal 2001, ended June 1, exceeding the company's revised guidance of $140 million to $160 million set on May 17. Palm reported revenue of $350.2 million in the fourth quarter of fiscal 2000.

Pro forma operating loss was $153.6 million for the fourth quarter of fiscal 2001. Pro forma operating loss excludes the effects of amortization of goodwill and intangible assets, purchased in-process technology, legal settlements, separation costs, and three additional charges recorded in the fourth quarter - an excess inventory charge, a restructuring charge, and an asset impairment charge. Palm had said earlier that it expected a fourth quarter pro forma operating loss between $170 million and $190 million. Palm's pro forma operating income in the fourth quarter of fiscal 2000 was $13.4 million.

Pro forma net loss was $89.2 million, or $0.16 per share, for the fourth quarter of fiscal 2001. This compares to pro forma net income of $17.2 million, or $0.03 per share, for the fourth quarter of fiscal 2000.

Actual net loss for the fourth quarter was $392.1 million, or $0.69 per share, compared to net income of $12.4 million, or $0.02 per share, for the comparable quarter last year.

"This has been a demanding quarter for Palm, our shareholders and our employees, but thankfully not for our customers, who continued to receive the best handheld solutions and services on the market," said Carl Yankowski, Palm's chief executive officer. "We entered the quarter knowing that the slowing economy would affect the handheld computing market on the eve of the largest product transition in Palm's history. We exited the quarter a leaner and more focused organization and with our new m500 series being well received around the world. We've moved quickly to improve operational efficiency, reduce expenses and headcount, and bolster our executive team. Volume shipment of the m500 series and close collaboration with our channel partners helped spur end-user demand, resulting in an overall reduction in channel inventory levels during the fourth quarter. These accomplishments, and other initiatives underway, position us to return to profitability in the second quarter of the new fiscal year, and to build on our leadership in this early and promising market."

Revenue for the full year was $1.56 billion, up 47 percent from the $1.06 billion reported in fiscal 2000. Pro forma net loss for fiscal 2001 was $28.5 million, or $0.05 per share, compared with pro forma net income of $58.4 million, or $0.11 per share, in fiscal 2000. Actual net loss for fiscal 2001 was $356.5 million, or $0.63 per share, compared with a net income of $45.9 million, or $0.09 per share, for fiscal 2000.

Palm shipped 6.4 million Palm handhelds during fiscal year 2001, bringing the total number of Palm-branded handhelds shipped to-date to approximately 13.7 million. More than 16 million Palm powered handhelds, including those sold by Palm licensees, have been shipped to date, versus Microsoft's reported estimate of more than 1.25 million Pocket PC devices.

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