Financial News

Palm sales surpass expectations

But tax gain masks income dip

Palm posted strong sequential and annual sales gains yesterday when it reported its Q2 FY2006 financial results. Revenues hit $444.6m, up 18 per cent on the year-ago quarter and 29.9 per cent on the previous quarter's $342.2m - and better than the firm had previously forecast.

Net income for the period, which ended 2 December 2005, was $260.9m ($5.02 per share), though $226.3m of that arose from a "partial reversal of a deferred tax asset valuation allowance", slightly less than the $240-250m gain the company forecast last quarter.

Ignore that and other one-off charges, and the figure was a more modest $24.4m (47 cents a share), down on Q2 FY2005's $27.2m (53 cents a share) but up from $21.1m (41 cents a share) in the previous quarter.

Palm said it shipped 602,000 Treos during the quarter, 81 per cent more than it did in the year-ago three-month period. The company claims a 78 per cent share of the US PDA market and a 36 per cent share of the US smart-phone arena. It said it makes eight of ten best-selling PDAs in the US.

Looking ahead, Palm said it expects the current quarter, Q3 FY2006, to yield revenues of $370-375m - post-Christmas is typically a quieter time for device makers like Palm - and earnings of 46-49 cents a share on a GAAP basis. Its gross margins will fall between 33 per cent and 35 per cent, the company forecast. ®

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