Palm Posts Loss But Sales Improve

Beleaguered Palm Inc. said Wednesday that its revenues for the quarter ending November 30 were up compared to the previous quarter but still were down from the same quarter a year ago.

The company reported revenues for the quarter of $290.6 million compared to $214.3 for the previous quarter. However, sales for the same quarter a year ago were about $522 million. The company reported a pro forma net loss of $36.6 million, or a loss of $.05 per share compared to net income of $27.5 million in the same quarter a year ago.

Revenues for the first two quarters of its fiscal year were $504.9 million compared to $923.2 million for a year ago.

Palm suffered a number of reversals in the last year, some of its own doing. Early in the year, it was later than expected bringing its most recent generation of handhelds to market. It then flooded the channel with the devices when they finally were released. That mistake, combined with a souring economy, led to anemic sales.

Palm also suffered from the emergence of handhelds based on Microsoft’s
Pocket PC platform. In particular, Compaq’s iPAQ Pocket PC handhelds made serious inroads, particularly in the enterprise, according to most market studies.

Even at that, though, Palm is still hanging on to a handheld market share of about 50 percent, according to market analysts. Combined with Handspring, which also uses the Palm OS for its handhelds, Palm-branded devices or devices using its platform still dominate the handheld marketplace.

Palm, not surprisingly, spun its results for the last quarter in a positive light.

“This quarter’s significant increase in revenue and improved results over last quarter reflect that we have gained traction in the marketplace and restored operational rigor,” said Eric Benhamou, Palm’s chairman and chief executive officer. “We have a tightly focused strategy; we are growing again and we believe we can execute our plans on time and within budget.”