Monday, December 1, 2008

Palm Posts "Preliminary" Q2FY09 Results

Earlier today, Palm posted their preliminary second quarter earnings results for fiscal year 2009 (Q2FY09). When the dust settles on Q2, Palm is expecting quarterly revenues along the lines of $190-$195 million. This represents a decline from last quarter's results of $366.9 million that was reported on September 18, 2008. Palm sites the "reduced demand for maturing smartphone and handheld products" and the "difficult economic environment" as the reasons for the decline.
"We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products," said Ed Colligan, Palm's president and chief executive officer. "In order to ensure Palm's long-term success during these uncertain times, we're taking several steps to significantly reduce our cost structure. These measures will help us navigate this difficult period while launching our next-generation products as planned."

Today's report also details several efforts that Palm has implemented in attempt to keep operating expenses down; including:
  • Reductions to the U.S. work force
  • Consolidation of European operations
  • Collapsing sales, marketing, & administrative support for the AsiaPac region to the US office
Palm will present their final Q2FY09 numbers during a quarterly earnings results conference call which is scheduled for December 18, 2008 to be held at 1:30pm PT/4:30pm ET. Details for the conference call can be found on Palm's Investor Relations website.

Analysis

As you will recall, Palm is some 18+ months into a corporate transformation that the company hopes will make it a relevant player in the mobile computing space again. To aid in the transformation, Palm has partnered with private equity firm Elevation Partners.

The current global economic conditions aside, Palm appears to be dealing with issues around delays in the release of their next Windows Mobile-powered smartphone(s), which is rumored to be a CDMA version of the GSM Treo Pro, released earlier this year without a carrier partner, for Sprint and/or Verizon. I have not read any credible rumors that suggest Palm is working to release an AT&T branded edition of the Treo Pro before the end of the year.

Palm is also still working to complete the development of their next generation operating system, Palm OS II/Nova. According to company executives, Palm is on track to complete the core of Palm OS II/Nova by the end of this year and expects to have devices shipping to customers by the middle of 2009.

Palm's stock was down -$0.51 to end the day at $1.88.
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