PalmSource Announces a Profitable Quarter

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PalmSource, the company responsible for developing and licensing the Palm OS, has announced the results for its most recent financial quarter, which ended in late November.

The company had a net income of $2.1 million, or 14 cents per share. In the same quarter a year ago, it lost $9.1 million, or 89 cents per share.

PalmSource had $19.2 million in revenue during the quarter, versus $16.8 million in revenue during the same quarter of 2003.

Part of this increase came from the $2.1 million the company received from a settlement with Acer.

PalmSource did much better than analysts were expecting. They had predicted earnings of 4 cents per share on revenue of $18.1 million.

The Company’s licensees reported shipping approximately 1.2 million units during this quarter, below the 1.3 million units shipped during the same quarter of 2003. PalmSource said the drop was the result of Sony leaving the world handheld market.

The number of smartphones running the Palm OS has increased dramatically in the last year. In the most recent quarter, 30 percent of Palm OS devices shipped were smartphones, up from just 6 percent in the same quarter a year ago.

Next Quarter Not So Rosy

PalmSource executives predicted their company will have revenue between $17.1 million and $18.9 million during the current quarter, which is over in February. They expect it to, at best, break even or take a loss, possibly as high as 11 cents per share.

This is well below analysts’ predictions, who previously said PalmSource would earn 35 cents per share this quarter on revenues of $23 million. This is typically PalmSource’s best quarter, as it’s when the licensing fees come in on handhelds and smartphones sold during the holiday shopping season.

This bad news has caused PalmSource’s stock price to drop. It is currently trading for roughly $12.50, about a dollar off its price on the day before this announcement.

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