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PalmOne Q3 Revenue Soars 22.6%

Milpitas, Calif. — Growing demand for palmOne’s Treo 600 combination PDA/phone helped the company increase fiscal third quarter sales and reduce its three-month net loss.

Revenue for the handheld computer maker climbed 22.6 percent, hitting $242.5 million, up from a year-ago $197.9 million.

The company narrowed its third quarter net loss to $9.3 million, down from a net loss of $172.3 million in the same three months a year earlier.

Excluding items of $4.5 million for restructuring charges and $5.4 million for amortization of intangible assets and stock-based compensation, palmOne would have recorded $614,000 in net income for the third quarter.

“The strong results this quarter show that our strategy of delivering scale from the handheld product line, coupled with growth from the wireless product line, is working,” said Todd Bradley, palmOne president.

Other highlights for palmOne’s third quarter, ended Feb. 28, included gross margin improvement to 28.9 percent from a year-ago 23.8 percent, and a $233 average selling price for handheld computing/communications products, up from $169 in the same three months a year ago. The company sold about 938,000 handheld devices in the period.

For the nine months, revenue moved up to $682.3 million from $620.5 million year-on-year, while the net loss was narrowed to $35.2 million from a year-ago loss of $427.6 million. Excluding items, the net loss would have been $8 million fiscal year-to-date.

PalmOne expects revenue of $245 million to $255 million in the fourth quarter, an increase of 13 percent to 17 percent, compared with the same three months a year earlier, the company told analysts in a conference call.

Net income for the fourth quarter is anticipated at break-even or somewhat in the black, while, excluding items, this should reach $2 million to $10 million, said palmOne.

For the 12 months, revenue is expected to hit $927 million to $937 million and rise about 15 percent the following year, with the company showing a profit.

Fourth quarter handheld revenue should reach $175 million to $180 million, said palmOne, with the Treo accounting for $70 million to $75 million on anticipated shipments of 160,000 units.