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Palm talks finances, turnaround strategy

Palm talks finances, turnaround strategy

Palm is moving ahead on its plans to create two different businesses out of what was formerly one. The turnaround strategy, started in June, continues and the company's second quarter financial outlook is being tweaked to bring cost structure and resources in align with the "strategic needs" of its Solutions and Platform businesses.

The Solutions Group is responsible for designing and delivering the Palm family of products, including the Palm m100 and Palm m500 series handhelds, as well as hardware add-ons, software and accessories. The Platform Group will develop and license the Palm operating system. By the end of the year, the group will become a separate subsidiary of Palm.

Palm said it expects to report revenue for its fiscal second quarter (ending November 30) of between US$250 million and $280 million -- a figure that is toward the upper end of its prior guidance. For the same period, Palm expects to meet consensus analyst estimates, with a pro forma loss of approximately 7 cents per share. "Pro forma" results are those excluding the effects of "amortization of goodwill and intangibles, restructuring charges and special excess inventory related charges/benefits." Look for Palm to report final results for the second quarter on December 19, after the market closes.

To bring its resources into alignment, Palm said it would reduce its current workforce by approximately 250 employees and contractors, after accounting for the planned hiring of additional people with skill sets to match the future needs of Palm's Solutions and Platform Solutions groups.

For example, with the completed acquisition of certain Be Incorporated assets, the Platform Group this month recruited 45 software engineers and support staff "to enhance its future OS roadmap and improve internal development processes." Plans to make the group a wholly owned Palm subsidiary are progressing on schedule under the direction of Dave Nagel, president and chief executive officer of Palm's Platform Solutions Group.

On August 16 Palm entered into a definitive agreement to buy Be's intellectual property and technology assets for $11 million, to be paid in common stock of Palm, which Be currently intends to liquidate as soon as reasonably practicable following the closing of the transaction.

As part of aligning cost structure with its business strategies, Palm is streamlining functions throughout the organization. In central functions, such as information technology, finance and human resources, Palm has increased efficiency by taking advantage of new systems and processes implemented in recent months, the company said.


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