Palm Beats Estimates, Sinks on Soft Guidance

Palm Inc. (PALM) reported a slight beat in adjusted net income in its latest quarter (F2Q08), but weak forward guidance pushed shares sharply lower (-7.6% as of 4:24 PM ET) in after-hours action. The company reported a net loss of $9.6 million (-$0.09/share). Adjusted EPS were -$0.07, which excludes stock-based compensation and restructuring charges. Sales were $349.6 million, including $282.4 million in Smartphone revenue. Palm sold 686,000 Smartphone units in its latest quarter, an increase of 11% from a year ago. Estimates were calling for adjusted EPS of -$0.09 on sales of $348.2 million.

For the current quarter, Palm expects adjusted EPS in a range of -$0.14 to -$0.16 on revenue of $310 to $320 million, short of the -$0.04 on revenue of $356.2 million analysts had been expecting. Commenting on Palm’s net loss and projection for further net losses, Palm CEO Ed Colligan said, “We are transforming Palm to exploit the market opportunity and instilling operational rigor throughout the organization. We’ve taken actions to align our expenses to the current operating environment and are focusing on core initiatives that will have the greatest impact on achieving our long-term success,” (check back later for Palm’s earnings call transcript). The company said it will no longer offer “specific financial guidance” but “will continue to provide general business guidance and comments on industry trends.” Palm shares gained 4.96% during regular trading Tuesday.

Sources: Press release
Additional Reading: Palm F1Q08 (Qtr End 8/31/07) Earnings Call Transcript • RBC: Palm's Just a 'Hail Mary Play' • Despite New Products, Palm Still Lags Behind RIM

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