palmOne Revenues Up on Strong Treo 600 Demand

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palmOne’s revenues were up significantly during its most recent financial quarter, but not enough to make the company profitable.

palmOne logo It reported revenues of $242.5 million during the December-to-February quarter, up 22.6 percent from the same period a year ago.

It had a net loss, in accordance with generally accepted accounting principles (GAAP), of $9.3 million, or 20 cents per share. This compares to a net loss from the year-ago quarter of $172.3 million, or $5.93 per share.

Clearly, the increase in revenue came as a complete surprise to analysts. On a non-GAAP basis, palmOne had a net income of 1 cent per share, while analysts had been expecting the company to take a non-GAAP loss of 31 cents per share.

“Over the past quarter, we strengthened our leadership in handhelds and saw excellent demand for our Treo smart phone,” said Todd Bradley, palmOne president and chief executive officer. “The strong results this quarter show that our strategy of delivering scale from the handheld product line, coupled with growth from the wireless product line, is working. We are very excited about our prospects.”

According to market-research firm NPD, palmOne increased its market share in U.S. sales (including retail, commercial, and online) to 57.7 percent in January, the most recent monthly report available. This is 11 percentage points higher than the same period a year ago.

According to figures released by the company, it drew 72% of its revenue from handhelds and 28% from the Treo 600 smart phone. In January palmOne announced it was putting greater emphasis on selling smart phones. Its primary reason for buying Handspring last year was to acquire both the Treo 600 and the expertise of the people who designed it.

The company ended the quarter with cash, cash equivalents, and short-term investments of $239.8 million, up from $224.8 million at the end of November.

Next Quarter Might Be Profitable

For its current financial quarter, palmOne’s CFO Judy Bruner said her company might have a slight profit or at least come close to breaking even.

palmOne’s announcement was made after the close of the stock market. Not surprisingly, the price of palmOne’s stock surged in after-hours trading. After closing at $13.84, it moved up to $15.62.

This announcement is good news for PalmSource, which gets a good percentage of its revenues from licensing fees paid by palmOne. PalmSource recently announced poor revenues for its last quarter but it appears that its current one will be better than expected.

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