Friday, June 26, 2009

Palm Reports Q4 and FY 2009 Results

Palm, Inc. today reported that total revenues in the fourth quarter of fiscal year 2009, ended May 29, 2009, were $86.8 million. Gross profit was $20.1 million and gross margin was 23.1 percent. These results include the effects of subscription accounting treatment required by GAAP. In accordance with this methodology,revenues and cost of revenues for the Palm Pre smartphone are deferred and recognized over the product’s estimated economic life.

On a non-GAAP basis, Adjusted Revenues in the fourth quarter totaled $113.2 million, Adjusted
Gross Profit was $30.4 million and Adjusted Gross Margin was 26.8 percent.

“The launch of Palm webOS and Palm Pre was a major milestone in Palm’s transformation; we have now officially reentered the race,” said Jon Rubinstein, Palm’s chairman and chief executive officer. “We have more to accomplish, but the groundwork is laid for a very promising future here at Palm. Our senior management team is capable, motivated and focused on execution; there is a large group of developers waiting to build great applications for Palm webOS; and we have a new product pipeline that we think will set a standard for the industry.”

The company shipped a total of 351,000 smartphone units during the quarter, representing a 6
percent increase from the third quarter of fiscal year 2009 and a year-over-year decline of 62
percent. Smartphone sell-through for the quarter was 460,000 units, down 5 percent vs. the third quarter of fiscal year 2009 and down 52 percent year-over-year.

In addition to the prepared statements that where posted on Palm's website, there where a few other items of interest that I took away from listening to the conference call.

  • Palm is continuing to wrap up production of the Pre to meet demand
  • US penetration for smartphones is 19%, 11% globally
  • A user experience that delights the customer was mentioned twice
  • The Mojo SDK program is being expanded; everyone will have access by the end of September
  • Palm plans to continue to roll out fixes and software enhancements to webOS that will be free to Pre customers
  • The Pre did not go on sale during Palm's Q4 period
  • Canada's Bell Mobility is the next carrier to begin shipping the Pre
I'm really surprised that both Palm's CEO and CFO where talking about building hardware and software products that delight the customer. That has been a long standing requirement at Palm, and it seems that even through the transition of senior company management, new hardware platforms, and a new mobile operating system, at the core, Palm is still the company that wants to be simply, easy to use products to market. I'm glad to see that delighting the customer is still very much a part of the company's DNA.

Palm still has a lot of work cut out for them, but after a long and hard road that started two years ago, we finally have a Palm that is really up to the challenge of building some new powerful solutions that we haven't seen in a long time from the company.

You can read the full Q4 and FY 2009 results document on the Palm website.
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