PalmSource beats Street with pint-sized profit

Palm OS developer PalmSource made a modest profit during its most recently completed fiscal quarter, the company said this week, beating analyst expectations into the bargain.

PalmSource reported a net income for the Q2 FY2005 of $2.1m (14 cents a share), well ahead of the four cents a share Wall Street average. Revenues for the period reached $19.2m, up 14.3 per cent on the year-ago quarter's $16.8m and 5.5 per cent above Q1 FY2005's $18.2m sales.

Q2's revenues included $2.1m from the settlement of a dispute with Acer. The rest came from licence sales and device royalties. Some 1.2m Palm OS-based handhelds shipped during the quarter, down from 1.3m in the year-ago period - largely, PalmSource claimed, from Sony's departure from the US and European PDA markets. Sony still sells Palm OS-based PDAs in Japan.

However, showing clearly where the market is going, PalmSource said smart phones based in its operating system accounted for 30 per cent of device shipments in Q2 FY2005, up from six per cent in Q2 FY2004.

Looking ahead, PalmSource said it expects Q3 FY2005 to yield revenues of $17.1-18.9m, down on the latest quarter's total. The decline will wipe out the company's profit, pushing it to break-even or at worse an 11 cents a share loss. ®

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