Palm's Poor Quarter Raises Concerns About Its Survival
The 2009 Consumer Electronics seems so far away now. At that show, Palm wowed the crowd with a new smartphone and operating system, the Palm Pre and its webOS software, respectively. There was talk that both would help Palm (NASDAQ: PALM) would reverse its years of declining fortunes.
That was 14 months ago. A lot has happened since then, little of it good. In its third fiscal quarter ended Feb. 26, Palm reported revenue of $349.9 million, well above the company's previous estimate of $300 million to $320 million. Non-GAAP revenue totaled $366 million, well above Wall Street's average estimate for sales of $316.2 million. The company reported a GAAP net loss of $22 million, or $0.13 per diluted common share. This compares favorably to a consensus analyst estimate by Thomson Reuters of $305.7 million in revenue and a loss of $0.43 per share.
But that good showing came in part because the company changed the timing of when it booked sales. Average selling price in the third quarter was $367, compared with $375 in the previous period. Sales on a per-unit basis were way down: Palm shipped 960,000 Pre and Pixi phones to carriers, but the carriers only sold 408,000 devices, down 29 percent from the second fiscal quarter. Cash on hand totaled $376 million exiting the quarter, while operating expenses clocked in at around $164 million.
Even worse, Palm sees fourth-quarter revenue coming in at less than $150 million, half of the $358 million expected by analysts surveyed by Thomson Reuters. As it is, last month