Previously anticipated spring demand for PDAs that did not materialize, along with deteriorating fiscal fourth-quarter market conditions, compared with the year-ago fourth quarter and recent months, has forced Palm to announce lower revenue expectations that could miss the company's target by as much as 23 percent.
Revenue for the quarter ended May 31 is now anticipated to be about $230 million, down from the previously expected $290 million to $300 million. Palm said it will not meet its breakeven profitability expectations for the fourth quarter, anticipating a loss before one-time items similar to the one recorded in the fiscal third quarter, when it lost $14 million. Palm still expects to report operational performance in line with prior guidance.
In explaining its immediate situation, Palm said May sales had not picked up, despite Father's Day and graduations, and the broad technology market continued to remain weak.
"While we remain optimistic about the long-term growth opportunities in the sector, we are disappointed that we will not meet our revenue and profitability goals this quarter," said chairman/CEO Eric Benhamou. "We expect to report improved gross margins, excellent expense management and a good cash position."