Revenue boost for PalmOne

Higher average selling prices for PDAs personal digital assistants and smartphones helped boost second-quarter revenue at...

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 Service

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