Palm Prepares for Slowdown in Handheld Purchases

True to earlier analyst estimates, Palm Inc. Tuesday reported $471 million in sales for the
third quarter but, like others in the tempestuous tech economy, they also
became leaner by trimming 250 employees from their staff to prepare for a
slowdown in spending.

Palm reported pro forma income of $9.3 million, or 2 cents a share for the
quarter, which was a penny higher than what First Call/Thomson Financial
analysts had expected. Actual net loss for the third quarter was $1.9
million, or nil per share, compared to net income of $11 million, or 2
cents per share, for the comparable quarter last year.

The handheld device leader also shipped 2.1 million handhelds in the
quarter, bringing the firm’s total number of units shipped to almost 13

In anticipating a slowdown in handheld orders in the coming months, Palm
Chief Executive Officer Carl Yankowski said he expects significantly less
fourth quarter 2001 revenues from the nearly $500 million it reported
Tuesday; the skipper anticipates a revenue range of $300 million to $315
million. Accordingly, the company expects to report a net loss of 8 cents
per share next quarter.

To accommodate the pending stagnation, the outfit will reduce its operating
expenses by cutting 250 employees and contract workers loose. The firm is
also postponing construction of a new headquarters in San Jose, Calif.,
which was scheduled to begin this month.

“Through these actions — combined with our pipeline of powerful and
innovative new products, services and Palm OS improvements — Palm will
emerge from this period of economic turbulence and product transition as an
even stronger company and a leader in mobile and wireless solutions,”
Yankowski said in a press statement.

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