Higher average selling prices for PDAs personal digital
assistants and smartphones helped boost second-quarter revenue at
PalmOne.
Second-quarter revenue for PalmOne's 2004 financial year was
$271.2m, up 5% from last year's second-quarter revenue of $257.9m.
Even though unit shipments fell from 1.44 million units in last
year's second quarter to 1.41 million in this year's second
quarter, the average selling price of PalmOne devices rose from
$160 to $172 on the strength of new products such as the Tungsten
T3 and the Treo 600.
PalmOne's second quarter ended on 30 November, one month after
the company acquired Handspring and spun off Palm OS developer
PalmSource.
The Treo 600 smartphone was the crown jewel of the Handspring
acquisition, which will help PalmOne carve out space in the growing
smartphone market, said president and chief executive officer Todd
Bradley.
The market for unconnected PDAs has declined steadily over the
past few quarters, but sales of smartphones that combine a mobile
phone with a PDA are expected to rise sharply over the next few
years, according to analysts.
PalmOne intends to add more wireless carriers for the Treo 600
and will probably reduce the price of the device as it recognises
cost savings from increased demand and better relationships with
component suppliers, said Ed Colligan, senior vice president and
general manager of the wireless business unit.
PalmOne is also hoping its new focus on the smartphone market
will help make the company profitable. In what is considered its
strongest quarter on a seasonal basis, PalmOne recorded a net loss
of $4.1m in accordance with generally accepted accounting
principles (GAAP).
On a non-GAAP basis, which excludes the amortisation of
intangible assets, restructuring charges, and losses from
discontinued operations, the company posted net income of $5.5m,
compared with a non-GAAP net income of $8.5m in last year's second
quarter.
The company posted a net profit of $2.6m from continuing
operations, which includes the results from one month with
Handspring's products and expenses, said Judy Bruner, senior vice
president and chief financial officer.
The company posted a net loss of $6.8m from discontinued
operations, which includes the two months in which PalmSource was
part of the overall company.
PalmOne continues to do the majority of its business in the US,
which accounted for 58% of its revenue in the second quarter.
Bruner predicted revenue would fall between $200m and $215m for
the third quarter. However, the company will post a net loss of
about $15m in the third quarter as it restructures to devote more
resources to higher growth and higher margin products such as the
Treo 600, she added.
Tom Krazit writes for IDG News
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