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PALM: As anticipated, they are finding it tough and marketing spend will have to be ramped up
Posted 18/12/09
The 2nd quarter earnings announcement from Palm was clearly disappointing and hardly supportive of the lofty valuation assigned to the business
Palm posted non-GAAP revenue of $302m, beating the Street at $266.2m and ahead of guidance – discount drive? The company shipped 783,000 smartphones in the quarter, down 5% from Q1, but up 41% from a year ago. Sell-through in the quarter was 573,000 units, down 29% from Q1, and off 4% year over year. The company posted a non-GAAP loss for the quarter of 37 cents a share, five cents worse than expected.
Sales on a GAAP basis, which reflect subscription accounting for its smartphones, was $78.1m.
No detail of unit sales of the Palm or Pixi.
Palm said on a conference call following its Q2 earnings release that the company saw “lower-than-expected sell through volumes at Sprint” in the latest quarter. Nonetheless, they repeated its previous forecast of revenue for the May 2010 fiscal year of $1.6 billion to $1.8 billion.
The company also said it expects to launch with new carriers partners in the near future.
Apparently there are now more than 800 apps now in the Palm store – a distance behind Apple
Palm is getting rid of subscription accounting, and will start recognizing revenue from handsets mostly up front – we never like dramatic accounting changes!
- Pixie, ASP was $375, down from $427 in Q1; due to lower cost!
- 573,000 units of sell through was close to 80% Web OS devices, which means (if you assume 79%) that there were 452,670 Palm and Pixie units sold. Research In Motion sold 10.1 million units in the quarter reported the same day.
- Gross margin in the quarter was 25.6%, down from 27.9% one quarter earlier.
- The company expects R&D and sales and marketing expense to be up sequentially in the February quarter.
- Cash use in the quarter is expected to exceed $80 million.
Where was the good news!
This entry was posted 2 years, 1 month ago and was filed under Palm Inc.
