Handspring Still Struggling Towards Profitability

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Handspring has posted its earning report for its most recent financial quarter. It had revenues of $54.1 million, compared with $61.4 million for the same period last year. However, its revenues were up slightly compared with the previous quarter. It announced that 70% of its revenues came from selling Treo smartphones, a much higher percentage than the previous quarter.

The company’s management team is optimistic. “A strong launch of the Treo 300 combined with significant expense reduction resulted in sequential growth and a good overall quarter,” said CEO Donna Dubinsky.

Net loss during the quarter was $15.3 million, or 11 cents a share. It had a net loss of $32.7 million, or 28 cents a share, the same quarter last year. It had a pro forma loss of $10 million, or 7 cents per share. Analysts had expected it to post a pro forma loss of 9 cents a share. At the end of the quarter, Handspring has $118 million in cash and investments, of which $73.8 million was unrestricted.

Handspring is a company in transition. From its founding in 1998, the company sold Visor handhelds with Springboard expansion slots. However, early this year the company began offering the Treo smartphone and switched its primary focus to that line and away from the Visor. “This quarter we moved our strategy forward to focus more on carrier partnerships and wireless communicators,” said Ms. Dubinsky.

The company says the Treo line is slowly starting to catch on. During last quarter, it sold about 44,000 Treos to consumers, doubling the number that had ever been sold.

However, it says much of this was because of pent-up demand for the Treo 300, the version that was released last quarter and can use Sprint’s high-speed CDMA network, and sales of this model will be less robust during this quarter. It expects sales of its other models to increase slightly. “There is no doubt that this new market is taking longer to get established than we had predicted,” said Ms. Dubinsky.

Previously, Handspring had said it hoped its revenues for the current quarter would be $80 million to $90 million and that it would post a small profit. Now it has lowered that estimate to between $54 million and $60 million. It now says it hopes to first post a profit in the quarter that ends in June of 2003.

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