Palm's sales tumble

September 20, 2001: 5:13 p.m. ET

Handheld computer maker logs wide loss, lower revenue

NEW YORK (CNNfn) - Handheld computer maker Palm Inc. on Thursday reported a wide fiscal first-quarter loss on sales that fell 47 percent from the same period last year.

After the close of trading, the top supplier of handheld computer said it lost $38.7 million, or 7 cents per share, during the quarter ended Aug. 31. That excludes the effects of excess inventory and other one-time charges and benefits, and compares with a profit of $23.9 million, or 4 cents per share, during the same quarter last year.

At $214.3 million, Palm's sales fell 47 percent from the $401 million it reported during the same quarter a year ago but rose 30 percent from the $165.3 million it posted in the fourth quarter of fiscal 2001.

Wall Street generally had expected the Santa Clara, Calif., company's loss for the quarter to be 9 cents per share, according to a survey of analysts polled by First Call, a research firm that tracks corporate profits.

Accounting for one-time charges and gains, Palm reported a net loss of $32.4 million, or 6 cents per share, compared with a net profit of $17.2 million, or 3 cents per share, during the same period last year.

The company, which makes money by selling handheld computers – also called personal digital assistants, or PDAs -- as well as the operating system software that drives them, said that during the quarter it shipped 750,000 Palm branded devices, bringing the total number of devices it has shipped since being formed in 1996 to more than 14 million.

Although it remains the leading supplier of PDAs, Palm has been faced recently with dwindling demand for such devices as well as increased competition.

While it licenses the Palm operating system, making it a partner in one respect, Palm (PALM: Research, Estimates) has been losing sales to Handspring (HAND: Research, Estimates) as well as other handheld computer makers in recent quarters.

Handheld computers based on Microsoft's "PocketPC" platform also have been pecking away at Palm's market share.

In June, research firm Gartner Dataquest forecast that Palm would lose its top spot in terms of revenue to Compaq (CPQ: Research, Estimates), whose iPAQ devices have become increasingly popular, especially in corporate enterprises.

"While there is much yet to do, we made significant progress on key operational goals in the quarter despite continuing worldwide economic uncertainty and growing competition," Carl Yankowski, Palm's chief executive officer, said in a statement.

Separately, Palm said Thursday it will postpone its PalmSource 2001 developer conference, which had been scheduled to begin Oct. 23 in San Jose, Calif., following last week's terrorist attacks on New York City and Washington.

The company said it plans to reschedule the event for later this year or early next year and will announce further details as they become available.