Higher Revenues for PalmSource, but No Profits

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PalmSource today reported the results of its most recent financial quarter. Revenue was up slightly, but still not enough to make the company profitable.

The company responsible for making the Palm OS had revenues of $18.2 million for the quarter that ended August 27, which is $1.1 million higher than the same period of the prior year.

Still, it posted a net loss of $200,000, or 1 cent per share. At least this was far less than in the same quarter of 2003, when PalmSource had a net loss of $3.8 million, or 38 cents per share.

On a non-GAAP basis, net income for the quarter was $800,000, or 5 cents per share. This compares to a non-GAAP net loss for the same quarter of the prior fiscal year of $1.5 million, or 15 cents per share.

PalmSource did better than analysts had expected. They predicted a non-GAAP loss of 2 cents a share.

“Overall, we are satisfied with our performance in this quarter,” said David Nagel, PalmSource chief executive officer. “We saw a continued increase in the percentage of units and revenues from smartphones as a percentage of our total units and revenues. This is a continuation of the trend we have seen in recent quarters. Smartphone royalties increased significantly, and largely offset the decrease in royalties from the sale of handheld devices resulting from Sony’s withdrawal of the CLIE handheld from markets outside Japan.”

During this quarter, Palm OS licensees reported shipments of 1.4 million Palm Powered units, of which 74 percent were handhelds, 21 percent were smartphones, and 5 percent were other devices.

At the end of the quarter, PalmSource’s cash, cash equivalents, restricted investments, short-term and long-term investments were $76.6 million. Cash utilized during last quarter was $12.2 million.

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