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PalmSource Revenue Climbs 7% In Fiscal Q1

Sunnyvale, Calif. — PalmSource, which provides the Palm OS operating system that powers mobile information devices and smartphones, reported a 6 percent increase in total revenue for its fiscal first quarter, hitting $18.2 million, up from $17.1 million.

The company also substantially reduced its net loss in the first quarter, ended Aug. 31, down to a negative $165,000, compared with a net loss of $3.8 million in the year-ago period.

Excluding cost effects for restructuring and the spin-off of PalmSource from palmOne, among others, the company posted net income of $765,000, compared with a net loss of $1.5 million in the same three months last year.

PalmSource said its gross margin percentage improved to 93 percent in the first quarter, up from 89 percent in the same period a year earlier. At the same time, the company said it continued to manage its expenses, in part, through a limited reduction of employees and curtailment of the use of contractors.

In the first three months, the company reported a continued increase in the percentage of units and revenue from smartphones as a percentage of total units and revenue. During the first quarter, smartphone royalties increased significantly, said PalmSource, and largely offset the decrease in royalties lost from the sale of handheld devices, resulting from Sony’s withdrawal of the Clie handheld from markets outside of Japan.

Palm OS licensees reported shipments of 1.4 million Palm-powered units in the first quarter, of which 74 percent were handhelds, 21 percent smartphones and 5 percent other devices. In the same quarter a year ago, Palm OS licensees recorded shipments of 1.2 million Palm-powered units, of which 90 percent were handhelds, 7 percent smartphones and 3 percent others.

PalmSource also reported in the first three months a $1.7 million positive cash flow from operations and that it prepaid a $15 million convertible note at a 12.5 percent discount, resulting in a $1.9 million balance-sheet gain for early extinguishment of debt.