Palm Fiscal Q4 Loss Nearly Cut In Half, Sales Dip

By Jeff Malester On Jul 7 2003 - 6:00am




Energized by a year-over-year 5 percent increase in sell-through of handheld computers, Palm reduced its fiscal fourth quarter net loss to $15 million, down from a loss of $27.5 million in the same three months last year. The handheld sales improvement followed six consecutive quarters of decline.

However, Palm reported gross margin for the quarter plunged 840 basis points, to 32.5 percent, compared with 40.9 percent in the fourth quarter in 2002.

Excluding one-time costs and other special items, Palm recorded a net loss of $8.9 million in the period ended May 31, compared with a loss of $17.8 million in the year-ago period. Related gross margin hit 32.7 percent, off 230 basis points from the 35 percent recorded a year ago.

Palm reported revenue of $225.8 million for its fiscal fourth quarter, a drop of 3.2 percent from the $233.3 million recorded in the same three months in 2002. Sales climbed 8 percent sequentially, compared with the third quarter.

"We end the year with favorable momentum on virtually every key metric of our corporate dashboard," said Eric Benhamou, Palm chairman and interim CEO.

"We are gratified to see our efforts to reinvigorate product innovation and to re-energize the market rewarded, and our unit demand return to positive growth territory," he said.

The maker of pocket-sized digital organizers said in June it would split its PalmSource software unit from its Palm Solutions hardware company. Palm's board has given final approval for the spin-off of PalmSource.

Revenue for the 12 months declined 15.4 percent, reaching $871.9 million, down from the $1 billion recorded in the previous fiscal year. Net loss for the 12 months zoomed to $442.6 million, up from a loss of $82.2 million a year earlier. Palm's net loss for the 12 months, excluding restructuring charges and other special items, hit $66.1 million, down from a loss of $107.1 million the previous year.

For the quarter, the Solutions Group recorded $217.1 million in revenue, down from the year-ago $226.4 million. The unit had an operating loss of $11.5 million in the fourth quarter, compared with a loss of $19 million in the same quarter in 2002. For the 12 months, the Solutions Group reported $837.6 million in revenue, compared with $1 billion year over year. The group had an operating loss of $202.2 million in the 12 months, compared with a loss of $131.5 million in the same period a year ago.

PalmSource had revenue of $17.3 million in the fourth quarter, down from $18.5 million in the same three months last year. Operating loss for the quarter totaled $2.7 million, down from a loss of $5.4 million in the same three months in 2002. For the 12 months, PalmSource had $73.4 million in revenue, down from $69.9 million year-on-year. Its operating loss for the 12 months hit $14.2 million, compared with a loss of $25.9 million in the same 12 months a year ago.

Palm, which is anticipating sales in the range of $175 million to $185 million for the current fiscal first quarter, up from $172.2 million a year earlier, said it shipped 931,000 Palm handhelds during the fourth quarter, up from 900,000 in the same three months last year. For the fiscal year, the company said it shipped 4.2 million handhelds, down from 4.4 million year over year.

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