Earnings: Palm’s Outlook Still Uncertain Despite Selling 810,000 Smartphones In Q1

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Sunnyvale, Calif.-based Palm (NSDQ: PALM), which is counting on its new webOS operating system to turn things around, released fiscal Q1 results today, revealing decent sales of its first handset, the Palm Pre. But the company warned that revenues will fall in Q2 based on its dependence on new product launches.

Palm sold at most, or 810,000, of the 823,000 smartphones it shipped during the quarter, of which “a vast majority relates to the Palm Pre,” the company said during its earnings call today. Palm said it continues to sell legacy products, such as the Treo Pro and the Centro, although volumes are low and will continue to fall over the next few quarters.

Chairman and CEO Jon Rubinstein said during the earnings call that the company’s attention will be on webOS, and not on legacy products, which were built on Microsoft’s Windows Mobile. “We will be focusing all of our efforts on building the webOS products. So while there are still Centros and Treo Pros, our future engineering efforts are based on webOS. We are absolutely confident on where we are going.”

Fiscal Q1 2010 Fiscal Q1 2009 Analysts Estimates For 2010
EPS $(1.17) $(0.39) $(0.24)
Net Income $(161.1M) $($39.5M) N/A
Revenue $68M $366.9M $297.7M

Release. Earnings Call.

Palm reported Q1 revenues of $68 million, a drop from the year-ago period when it reported $366.9 million. However, the company explained that revenues for the new webOS products will be recognized over the products lifecycle, which makes GAAP results a bit misleading. To get a better picture, the company also reported non-GAAP figures, which exclude the impact of subscription accounting. In that case, it reported revenues of $360.7 million and a non-GAAP net loss of $13.6 million, or 10 cents a share. In the year ago period, it had a non-GAAP net loss of $12.8 million, or 12 cents a share.

In the second quarter, the company expects non-GAAP revenues to fall to between $240 million and $270 million. Even though the company just announced the Palm Pixi and it plans to launch the Pre soon with Telefonica (NYSE: TEF), it explained that revenues will still fall because of the timing and scale of expected product launches in the second quarter and due to lower anticipated demand for legacy products.

3 Comments

Staci D. Kramer

@David S. Thanks for catching those. Hope you also got something out of the story …

David S.

You have two typos in the Palm article: Says: "of new" should say: "on new" and says "a most" should say "most".

"…will fall in Q2 based on its dependence of new product launches.

"Palm sold a most, or 810,000, of the 823,000 smartphones …"

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