06
Dec
07

Palm expects loss in 2Q

Smart phone maker Palm Inc. lowered its second-quarter outlook Thursday and palm_logo_cmykFPO1 said it will swing to a wider-than-expected loss, blaming the sales shortfall on the delay of a product launch.

Palm said it expects sales to tally between $345 million and $350 million, below its earlier guidance of $370 million to $380 million as well as analyst expectations of $376 million.

The Sunnyvale-based company said it expects to post a loss of 22 cents to 24 cents per share. In October, Palm originally predicted a loss of 1 cent to 3 cents per share.

In the year-ago period, Palm earned 12 cents per share on sales of $393 million.

Excluding one-time items, Palm now expects the loss per share to be 8 cents to 10 cents. On that adjusted basis, analysts were projecting a profit of 4 cents per share, according to a poll by Thomson Financial.

“We are disappointed that we did not get a key product certified for delivery in the quarter, but we are focused on realizing the long-term benefits and opportunities that inspired our transaction with Elevation Partners,” Palm President and CEO Ed Colligan said, referring to the private equity firm recently taking a stake in Palm.

Palm did not specify the product that was delayed. It cited, however, additional factors behind the shortfall: an unforeseen increase in warranty repair expenses and higher-than-expected shipments of its low-priced Palm Centro smart phone, which cut into profit margins.

Company representatives did not immediately return phone calls for further comment.

Full results for the company’s fiscal second quarter, which ended Nov. 30, will be released on Dec. 18.

Shares of Palm rose 27 cents, or more than 4 percent, to $6.59 but tumbled $1.08, or more than 16 percent, in extended trading, following the news.

Palm, whose Treo once defined the category of hybrid data- and Web-capable cell phones, has struggled against stiffening competition.

The company also has suffered missteps, including other product delays and the cancellation in September of a portable computer called Foleo.

Though its sales of phones were up in its fiscal first quarter, the company swung to a small loss, and its stock has been flailing since its most recent high, Oct. 24, of $19.18.

“Palm is continually shooting itself in the foot,” said Jeff Embersits, analyst at Shareholder Value Management. “They just don’t have the scale or size anymore to pull it off.”

Via Yahoo


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