Palm Sales To Dealers Increase In Fiscal Q3

By Jeff Malester On Apr 2 2001 - 6:00am

SANTA CLARA, CALIF. -Handheld computer maker Palm Inc. registered strong year-over-year revenue and shipment growth, reflecting consumer interest in the company's products.

Sales in the fiscal third quarter ended March 2 soared 73 percent to $470.8 million, up from $272.3 million in the same three months last year.

Shipments of Palm handhelds during the third quarter rose 112 percent to 2.1 million units, bringing the total shipped by the company to date to 13 million.

Pro forma net income, however, dropped about 70 percent to $9.3 million, compared with $15.8 million in the third quarter of last year. Actual net loss for the third quarter was $1.9 million, compared with a net income of $11 million for the year-ago three months.

"Palm has recently begun to feel the effects of the deteriorating macro economic environment," said CEO Carl Yankowski, "resulting in a reduced order rate amid signs of what appears to be a sector slowdown. Based on this, we believe that demand is approximately flat to the fourth quarter a year ago in which revenues were $350 million."

In anticipation of shipments of its new m500 series handhelds-with Version 4.0 operating system that includes 16-bit color, increased security and telephony support-Palm expects fiscal fourth-quarter revenue in the range of $300 million to $315 million. It also expects to report a net loss in that three months.

At the same time, handheld computer maker Handspring confirmed revenue projections for the remainder of its fiscal year ending June 30. Founder/CEO Donna Dubinsky said, "While no company is immune to current economic conditions, we see continued sales growth in our business at this time."

Pro forma operating expenses in the fourth quarter at Palm are expected to increase to $160 million to $165 million with the launch of new products and accompanying promotion. Palm expects to reduce operating expenses in the coming months, however, resulting in savings of 10-15 percent from expected fourth-quarter levels. The company also expects to incur a one-time charge in the fourth quarter, associated with various cost-cutting measures.

For the nine months, Palm sales increased 97 percent to $1.4 billion, compared with $707.4 million in the year-ago period. Pro forma net income for the nine months was $60.7 million, about a 49 percent drop from the $41.2 million recorded in the same period last year. Actual net income for the first nine months was $35.6 million, about a 9 percent dip from the $33.5 percent registered in the year-ago nine months.