Palm looks to profitability as Q4 losses, sales beat expectations
Still has a lot of unsold kit to shift, though
Palm reckons it will be back in the black by the end of the year but having just announced an operating loss of $153.6 million, it may have a tough time achieving its goal.
For the three months to 1 June - Palm's fourth quarter - the company recognised revenues of $165.3 million, just above the $140-160 million range it forecast in May, but still well down on the $350 million it recorded this time last year.
Back then it also said it expected losses in the range $170-190 million, so again, the final figure of $153.6 million proved better than expected, though such company-anticipated figures often err on the side of caution (and making the final figure look a little better).
Driving the massive loss was a $268.9 million inventory write-down, a move Palm was always going to have to make to shift its older PDAs quickly so they don't interfere with the take-up of its new m50x family.
Also contributing were a $60.9 million charge arising from layoffs and its decision to forego on a shiny new HQ. Further charges totalling $160.7 arose from the drop in the value of the land on which its HQ was to have been built and other expenses.
Charges swelled Palm's headline loss to $392.1 million (69 cents a share).
Looking ahead, Palm CFO Judy Bruner said the company will post on operating loss of $60-80 million next quarter, the first of fiscal 2002. on revenue up around 27 per cent to $200-220 million. Q1 will be all about inventory management, with Palm hoping to get its inventory down to 4-8 weeks, from its current size, 10 weeks.
Q2 should see the company return to profit with a modest income of $5-20 million on revenues of $420-440 million, buoyed by pre-Christmas spending.
The company has at least $158 million in costs - inventory, restructuring charges and land expenses, mostly - to spread over the next two quarters. It also plans to spend a shedload of cash to promote the new m505 'iPaq killer' PDA.
Palm CEO Carl Yankowski yesterday used his TechX (aka PC Expo) keynote to stress the company's moves to attract corporate buyers. He also said that consumer demand rose in May to the level it had been in February. But with the US economy in the state it's in, consumer demand should probably be seen as fickle for the time being. ®