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| Thursday, June 29, 2006 |
SAN FRANCISCO (Reuters) - Handheld computer and phone maker Palm Inc. (NasdaqNM:PALM - ) on Thursday forecast weaker- than-expected results for the current quarter, sending shares down more than 9 percent.
At the same time, Palm reported net income that rose 53 percent, helped by strong sales of its Treo mobile phone.
Palm has decided to stop selling its Treo 650 in Europe phone after June 30 because it is not compatible with a new phone technology standard used there, Chief Executive Ed Colligan on a conference call, in explaining the lower-than- expected forecast.
"We felt like the product was long in its life cycle," Colligan said. "It's something that's a transition issue that we have to deal with."
Palm, which one year ago was still going by the name PalmOne, said net income rose to $27.2 million, or 25 cents a share, for the fiscal fourth quarter from $17.7 million, or 17 cents a share, in the year-ago period.
Excluding special items, the profit was 29 cents a share.
On that basis, analysts, on average, had expected a profit of 23 cents a share, according to Reuters Estimates.
Revenue rose 20 percent to $403.1 million. Analysts had expected revenue of $405.4 million.
Colligan said it was working to introduce a model in Europe to replace the Treo 650 "as fast as we possibly can," but he did not specify a date for its introduction.
Competition in the so-called smart phone market is heading up, as rival Motorola Inc. (NYSE:MOT - News) started selling its Q earlier this month and Nokia (NOK) launched the E61 in April.
"When categories grow, you can expect new forays into that space," Colligan said.
Shares of rival Research In Motion Ltd. (NasdaqNM:RIMM ), which has about 75 percent of the smart phone market, rose 5.7 percent to $69.84 in extended trading, after Palm reported.
For the current fiscal first quarter, Palm expects to earn between 18 cents and 19 cents a share, excluding one-time items. That is below analysts' average forecast of 22 cents a share, according to Reuters Estimates.
Including items, Palm forecast quarterly earnings of 13 cents to 14 cents a share.
Revenue for the quarter is expected to be between $380 million and $385 million, below the current Wall Street expectation of $412.4 million.
Palm shares were down 9.3 percent at $16.92 in after-hours trading after closing at $18.66 on Nasdaq. In regular trading, the stock fell 1 cent. |
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