Palm swings to Q2 loss
Shares of Palm Inc. (Nasdaq: PALM) are falling on news after Tuesday’s close that the maker of smartphones swung to a loss during its fiscal second quarter.
The Sunnyvale, Calif.-based company reported that its net loss for the three months ended Nov. 30 was $7.8 million, or $0.07 per share, compared with a net income of $17.6 million, or $0.17 per share, a year earlier. Wall Street was expecting a slightly larger net loss of $0.08 per share, according to a poll of 13 analysts by Thomson Financial.
Revenue during the second fiscal quarter fell 11% to $349.6 million from $392.9 million a year earlier. Sales of Smartphones increased 11% to 686,000 units from 617,000 units.
“Sales of Smartphones have increased but have been offset by declines in sales of Palm Pilots,” said James Faucette, wireless equipment analyst with investment bank Pacific Crest Securities, in a phone interview. Additionally, the profit margins on Smartphones are lower than in the past, according to Faucette.
“My expectation is that the lower margins will persist for at least the next one to two quarters,” said the analyst.
The company appears to be entering a period of change.
“We are transforming Palm to exploit the market opportunity and instilling operational rigor throughout the organization,” CEO Ed Colligan said in a statement. “We’ve taken actions to align our expenses to the current operating environment and are focusing on core initiatives that will have the greatest impact on achieving our long-term success”
Looking ahead, Palm’s third-quarter guidance disappointed analysts. The company projects revenue between $310 million and $320 million, well short of Wall Street’s projected $358 million.
Nevertheless, Faucette said he is optimistic about Palm.
The Sunnyvale, Calif.-based company reported that its net loss for the three months ended Nov. 30 was $7.8 million, or $0.07 per share, compared with a net income of $17.6 million, or $0.17 per share, a year earlier. Wall Street was expecting a slightly larger net loss of $0.08 per share, according to a poll of 13 analysts by Thomson Financial.
Revenue during the second fiscal quarter fell 11% to $349.6 million from $392.9 million a year earlier. Sales of Smartphones increased 11% to 686,000 units from 617,000 units.
“Sales of Smartphones have increased but have been offset by declines in sales of Palm Pilots,” said James Faucette, wireless equipment analyst with investment bank Pacific Crest Securities, in a phone interview. Additionally, the profit margins on Smartphones are lower than in the past, according to Faucette.
“My expectation is that the lower margins will persist for at least the next one to two quarters,” said the analyst.
The company appears to be entering a period of change.
“We are transforming Palm to exploit the market opportunity and instilling operational rigor throughout the organization,” CEO Ed Colligan said in a statement. “We’ve taken actions to align our expenses to the current operating environment and are focusing on core initiatives that will have the greatest impact on achieving our long-term success”
Looking ahead, Palm’s third-quarter guidance disappointed analysts. The company projects revenue between $310 million and $320 million, well short of Wall Street’s projected $358 million.
Nevertheless, Faucette said he is optimistic about Palm.
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