Palm has announced the financial results of the first quarter of the 2010 fiscal year (ending August 31 2009), and the company has beaten estimates and has seen a strong increase in sales (but only quarter-over-quarter). However, Palm is still seeing losses, but these losses were less than expected. During the conference call following the presentation of the results, Palm CEO Rubinstein also announced that Palm will completely abandon Windows Mobile in favour of the webOS.
The number everyone was waiting for was the number of Pre smartphones the company had shipped during this quarter, but this question was not answered – at least not directly. They only gave the total number of smartphones sold: 823000, up 134% from last quarter’s 351000 units, but a 30% decrease over the same quarter last year.
While we can’t know for sure the exact number of Pres sold, we can still make an educated guess based on simple mathematics. Last quarter, Palm sold 350000 smartphones (rounded down). Reports indicate that about 70000 of those were Pres stuck in channel, meaning that 280000 non-Pre smartphones were sold last quarter. In the press release, Palm mentions a decrease in demand for what it calls legacy products, so let’s take a conservative decline of 10% over the first quarter, leaving us with about 250000 non-Pre smartphones sold. This means that Palm sold 823000 – 250000 = 573000 Pres. This is well above the estimates of most analysts, but obviously bear in mind that this is just an educated guess.
Looking at the cold and harsh figures, things get a little confusing with all this GAAP and non-GAAP stuff. Since I don’t want to make any mistakes, let me just copy what CNet had to say:
But even though sales of the Pre were strong, Palm still ended up losing $164.5 million, or $1.17 per share in its fiscal first quarter. Still, the company’s losses beat analyst expectations. Excluding items, the company posted a loss of 10 cents a share. Analysts had predicted a loss of 25 cents a share, according to Reuters.Palm’s sales declined to $68 million. But on a non-GAAP basis, revenue came in at $360.7 million. Wall Street analysts had predicted between $289 million and $297 million.
With sales of Pres this quarter coming mostly from a single carrier in a single country, this isn’t all that bad. The Pre has been launched in Canada too now, and Europe is right around the corner, as is the holiday season and the launch of the Pixi.
Palm’s CEO John Rubinstein also took this opportunity to announce that Palm is dropping Windows Mobile. While they will continue to sell the current crop of Windows Mobile-based Treo devices, all research and development will be focussed on the webOS, and all future products will use the webOS.
Things Apple could learn from Palm. Part Three!
“Things Apple could learn from Palm. Part Three!”
Apple could learn to lose money and disappoint analysts like Palm?
Edited 2009-09-18 01:21 UTC
No, they already did that in the 90’s.
thank you, Captain Obvious!
How many Windows Mobile handset makers are there left?
There are HTC and Samsung, so it won’t die anytime soon. (
)
Edited 2009-09-18 09:05 UTC
All Palm WM phones were rebranded HTC, so basicly same as before. LG, Acer, Asus-Garmin, Samsung, HTC and Sony-Ericsson are still making. And according rumors atleast 3 makers have agreed on WM7 “chassis” specs, so they aren’t going anywhere.
The Treo 800w (which I have) isn’t made by HTC.
I don’t understand the positive response Thom is giving to palm on their financial results. Their results were hardly positive.
The company lost $164.5 million, or $1.17 per share in its fiscal first quarter. That’s a 293% wide year-over-year loss.
Also, (contrary to Thom’s report) sales badly missed expectations. Sales fell to $68 million. Analysts’ forecasted sales of $291 million.
Even the non-GAAP revenue (something typically regarded as a bright spot amongst most companies of this types) was bad. Palm said it expects non-GAAP revenue of $240 million to $270 million –Analysts expected $344.4 million.
Why is this site trying to paint a rosy picture where there is none to be had?
You are confusing the GAAP figures. Check your sources.
Thom, I think you need to check YOUR sources:
“For the current quarter, Palm said it expects non-GAAP revenue of $240 million to $270 million — sharply lower than the $344.4 million expected by analysts. The company cited “timing and scale of expected product launches,” as well “lower anticipated demand for legacy products.”
In the first quarter, Palm said its loss widened to $161.1 million, or $1.17 a share. Excluding charges related to stock options and other items, the company said its net loss would have been $13.6 million, or 10 cents a share, for the recent period.
Analysts were expecting a net loss of 24 cents a share, according to Thomson Reuters.”
“The Sunnyvale, Calif.-based company lost $164.5 million, or $1.17 per share in its fiscal first quarter, ended Aug. 31. That’s 293% wider than the $41.9 million loss the company recorded during the same time last year.”
http://www.marketwatch.com/story/palm-shares-slide-ahead-of-after-h…
http://money.cnn.com/2009/09/17/technology/palm_earnings/index.htm
Edited 2009-09-18 01:22 UTC
Read that back again. “CURRENT quarter”. Which is the SECOND quarter. This article is about the PREVIOUS quarter, the FIRST quarter. You are mixing up reported results with expected results.
The reported results are as detailed in the article. Expected results for the second quarter are what you are describing here. Don’t mix them up.
Edited 2009-09-18 01:27 UTC
“This article is about the PREVIOUS quarter”
From your article,
“Palm has announced the financial results of the first quarter of the 2010 fiscal year
My comment references both previous and current… both of which were not positive.
The usual problem is that due to restrictions on revenue reporting, certain figures cannot be reported in the quarter that they were earned and must be deferred.
Thus, even if they brought in a huge amount of cash revenue during Q1, they cannot count it as revenue earned in their earnings statement until it’s is “realizable”.
Public company earnings statements suck. Please don’t spout on about things you may not fully understand.
Ultimately – it seems Palm lost less than they predicted they would lose – which suggests that they’ve stopped the bleeding and are on the mend. That’s always promising to investors.
It does not mean they have stopped the bleeding. It only means they are bleeding less than expected.
ok, fair enough
“The usual problem is that due to restrictions on revenue reporting, certain figures cannot be reported in the quarter that they were earned and must be deferred.”
Yes, thats what GAAP earning are
“Public company earnings statements suck. Please don’t spout on about things you may not fully understand.”
Don’t assume I don’t understand… especially when I’ve offered the most well thought out feedback on this thread thus far.
The GAAP earnings are irrelevant if the company is still losing revenue even when the money is eventually realized as PALM has repeatedly demonstrated.
“Ultimately – it seems Palm lost less than they predicted they would lose – which suggests that they’ve stopped the bleeding and are on the mend.”
Actually, no. Even that isn’t correct. They couldn’t beat their own previous quarterly projection or even the most liberal analyst’s projections… and this even after the GAAP revenue was realized.
“That’s always promising to investors.”
It would be if in fact they had something promising to report.
http://news.cnet.com/8301-30686_3-10356044-266.html?tag=newsEditors…
http://finance.yahoo.com/news/Palms-Q1-Better-Than-Expected-ibd-243…
http://www.ft.com/cms/s/0/86c7f3dc-a3d5-11de-9fed-00144feabdc0.html
This is just a random selection of items from around the web, from reputable sources all stating that PAlm beat expectations – something you are denying. Are you arguing that everybody is wrong, and only you are right?
Come one, dude. Give it up already.
“Shares in Palm fell 5 percent as some investors were disappointed that the price would match rather than beat iPhone’s price and Sprint’s chief executive said on Tuesday he expects Pre shortages around the launch.”
http://www.pcmag.com/article2/0,2817,2347357,00.asp
“The much-hyped Pre smartphone helped boost Palm’s smartphone shipments from 351,000 in the prior quarter. The company did not separate Pre sales from other Palm phones, but experts forecasted Pre shipments of about 520,000, according to Matthew Thornton, analyst at Avian Securities.”
http://money.cnn.com/2009/09/17/technology/palm_earnings/index.htm
“Oppenheimer analyst Lawrence Harris said he was disappointed with Palm’s fourth quarter Treo sales and its outlook for the current quarter. ”
http://www.reuters.com/article/businessNews/idUSWEN907720070629
This is just a random selection of items from around the web, from reputable sources all stating that Palm disappointed analysts and investors – something you are denying. Are you arguing that everybody is wrong, and only you are right?
Come one, dude. Give it up already.
Edited 2009-09-18 07:38 UTC
Your first link is fro May, and has nothing to do with the current results we are discussing here.
Your second link CLEARLY states that Palm beat analysts’ expectations:
Your third link is ALSO horribly outdated, as it stems from June 29th.
This is just silly. Why are you using outdated articles that have no relevance to the case at hand? Do you have an agenda or something?
I admit i did a quick search and didn’t properly analyze the content or the date of the articles… but the point was that Palm clearly did not post positive results yet you are reporting it as if they did.
It is you sir who needs to answer the question, “Do you have an agenda or something?” as your article seems to indicate otherwise.
I posted the results in the same way everybody else, and in the way which is correct. The conclusion all important media outlets agree upon? Palm did better than expected. That is, in fact, positive.
You don’t turn a company around in one quarter. It takes time. These here are signs that the bleeding is getting less, and it’s doing better than analysts and Palm itself had expected. You can’t really ask for more from a company which has been in trouble for a long time, in such an economic climate. And all mostly because of a single product that only Americans can buy.
It seems like to me that you think that losses always means a company is doing bad, which is simply a shortsighted view on things. You have to look at the context.
First you mix up previous quarter results with current quarter expectations, and then you come up with old articles or articles that actually support my point – and you claim I have an agenda?
Edited 2009-09-18 08:00 UTC
A company *IS* doing bad until it can post a profit.
Speaking for myself… I don’t want the bad news sugar coated by someone telling me that the bad news from a company wasn’t as bad as before therefore that makes it good news.
You however may know the readers of this site better than I. Perhaps OS News readers DO like their bad news sugar coated. If that’s what you feel you need to do, be my guest. But please don’t try to tell me I’m wrong when I call a spade a spade.
“First you mix up previous quarter results with current quarter expectations”
I didn’t mix that up at all. You assumed I did when you thought I didn’t understand what GAAP earnings were yet even with the GAAP earnings the company didn’t meet even their own projections.
The bottom line is Palm posted poor results and you reported that they did great. That sir is an agenda. Had you simply said that you got your information from a source that sugar coated the news and corrected your mistake that would be fine… but now you’re trying to defend your sugar coating of the bad news just to save face.
Edited 2009-09-18 08:19 UTC
It is not an agenda and it is not sugar coating. It is simply how, for good or ill, financial analysis works. Wall Street thrives on expectations. If you study share movement around earning reports you find that share movement is more tightly bound to expectations rather then profits. If a company beats expectations their stock is likely to rise, if if beating expectations simply means they bled less then people though they were going to bleed. Conversely if your company doesn’t meet expectations your stock is likely to fall, even you posted a profit. Beating expectations shows investors that your company is on the right track, while falling short of them gives investors the appearance of stagnation and mismanagement. You can argue if that is the right attitude to have, but it does not change the fact that the vast majority of financial analysts think this way, and Thom reporting from the same line of thought does not mean he has an agenda.
I’m as likely as any to dog thom, but he is definitely right on this point.
“yet even with the GAAP earnings the company didn’t meet even their own projections”
GAAP earnings aren’t some secret trick to add revenues to a ‘normal’ report. It’s a different way of reporting revenue which actually results in _worse_ looking numbers in a situation like this (soon after the launch of a big new product). You don’t take the two sets of numbers and add them together, or something. You look at either the GAAP or non-GAAP numbers in isolation, and when comparing to predictions, you have to be careful to check whether the predictions were looking at GAAP or non-GAAP reporting.
Come one, dude. Give it up already.
Come on, both of you, and stop that bickering. It’s like watching two children fighting over the same toy.
Some analysts predicted better results and were disappointed, some predicted worse results and were delighted. BOTH STATEMENTS ARE CORRECT.
There. Now shut up.
Every article I’ve read thus far except for Thom’s was that they did not meet expectations. With that said the stock did poorly after the results so in fact people were disappointed by the news
The stock did not do nearly as poorly as you would want to make it seem, however. So far it has nosedived to the same point it was at…a week ago. I’m not sure why you seem to keep insisting that all articles claim less than expected results.
Looking at Etrade’s news aggregator now:
MarketWatch: “Shares of Palm Inc. fell Friday morning after the maker of wireless devices reported better-than-expected quarterly results but issued a disappointing forecast for the current period.”
and Briefing.com: “Palm reported a first quarter loss after the close yesterday that was better than expected and provided mixed financial guidance. Separately, the company announced that it intends to offer approximately 16 million shares of common stock.”
Diluting their stock certainly isn’t going to help things.
It’s clear that haus is nothing more than a practiced troll, however.
Yeah, that’s pretty much the only conclusion possible here. First I thought I was crazy, that maybe I had misread the dozens of articles clearly stating Palm exceeded expectations.
In fact, the only website looking at these articles in the same way “haus” does is… MacDailyNews.
Which pretty much says it all.
Good for Palm. They must be original and offer a real alternative to the iPHONE. All the other cellphone manufactures are a bunch of loosers…all they do is to emulate Apple.
-2501
Good for Palm?
They posted poor results.
If they keep bleeding money like this they will become easy targets for takeover. I wonder who would be interested in buying them? With the now widespread adoption of Android, I don’t think we’d see too many people stepping up to the plate for another smartphone OS.