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Palm narrows fourth-quarter loss

Palm narrows fourth-quarter loss

Palm is still losing money, but has nevertheless shattered analyst estimates for its fiscal 2003 fourth quarter with a narrower-than-expected loss, the company has claimed.

Palm posted a fourth-quarter net loss for the period ended May 31 of $US15 million on revenue of $US225.8 million, according to GAAP (generally accepted accounting principles) standards. This compared to a fiscal 2002 fourth-quarter net loss of $US27.5 million on revenue of $US233.3 million.

"The handheld industry is continuing its recovery," chairman and interim chief executive officer, Eric Benhamou, said. "Our focus on innovative solutions and operating discipline is paying off."

When measured on a non-GAAP basis, Palm posted a net loss of $US8.9 million, or $US0.30 a share. Analysts surveyed by Thomson First Call had predicted Palm wouldbring in revenue of $US187.65 million, and post a net loss of $US0.93 a share, on a non-GAAP basis, in estimates released prior to Palm's announcement.

The non-GAAP figures excluded items such as a $US2 million restructuring charge and a $US3.8 million expense related to the pending separation of PalmSource, the company's operating system subsidiary, Palm said.

The PalmSource spin-off was planned for the third quarter, at the same time Palm expected its proposed acquisition of Handspring to close.

The better-than-expected results were due to strong sales of Palm's Tungsten C and Zire 71 products, that were launched in April, senior vice-president and chief financial officer, Judy Bruner, said.

The company had been unsure how quickly those products would affect Palm's bottom line but was pleasantly surprised by demand for the handhelds, she said.

The company shipped 931,000 Palm handhelds in the fourth quarter, for a total of 4.2 million units shipped during its 2003 fiscal year, it said.

It shipped about 1 million handhelds in its fiscal 2003 third quarter, according to its earnings news release for that quarter.

Sales of personal digital assistants (PDAs) had fallen for the last two quarters, according to IDC research.

Palm still led the market, but sales of its handhelds had declined while sales of PDAs based on Microsoft's Pocket PC operating system were rising.

This trend was beginning to turn around, Bruner said. Palm increased the number of its handhelds shipped from distributors to end-users worldwide by 5 per cent in the fiscal 2003 fourth quarter, the first sequential increase in six quarters, she said.

For the full year, Palm's revenue was down 15 per cent from fiscal 2002 to $US871.9 million. The company posted a GAAP net loss of $US442.6 million for its fiscal 2003 year, compared to a loss of $US82.2 million for its 2002 fiscal year.

Palm expected first-quarter revenue in its 2004 fiscal year to be between $US175 million and $US185 million, down sequentially due to seasonal trends, Bruner said.


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