Palm Says Loss to Meet Estimates, Cuts 250 Jobs

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Palm Says Loss to Meet Estimates, Cuts 250 Jobs November 28, 2001 6:03 pm EST SANTA CLARA, Calif. (Reuters) – No. 1 hand-held computer maker Palm Inc. (PALM.O) said on Wednesday it expects a second-quarter loss to meet consensus estimates as it tries to cut costs, which include trimming its work force by about 250 employees and contractors. The company, whose shares have fallen about 90 percent this year and whose chief executive recently resigned, said it expects to report revenues for its fiscal second quarter of $250 million to $280 million, which is toward the upper end of its prior guidance. Palm also said it expects to meet consensus Wall Street estimates before amortization, restructuring charges and other items, for a pro forma loss of 7 cents a share. In September, the Santa Clara, California-based company forecast second quarter revenues “flat-to-up” from first quarter revenues of $214 million. But that was one-half of the $420 million analysts had predicted in the quarter. “We are pleased to report an improvement in our revenue outlook,” said Chairman and Chief Executive Eric Benhamou. “Palm is executing better than a few months ago in both of our core businesses. And we are now in a position to further reduce our cost structure.” The staff cuts take into account jobs added as a result of Palm’s recent acquisition of certain assets of Be Inc., including 45 software engineers and support staff. As part of the company’s efforts to cut costs, Palm also said it was slimming down functions throughout the company, including information technology, finance and human resources. This is the third set of job cuts for Palm this year, which began with the company as one of the technology sector’s hottest properties. While Palm still controls the market for the gadgets and the software that powers them, the economic slowdown, a troubled roll-out of new products and an aggressive price war with chief rival Handspring Inc. (HAND.O) has taken its toll on the company’s share price and bottom line. Palm is in the process of completing plans to split its software and hardware groups into two separate but wholly-owned businesses. Shares of Palm rose to $3.61 in after hours trade on Wednesday after closing at $3.41, off 21 cents or about 6 percent.

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