Palm beats expectations with small Q3 gain

Despite a year-on-year decline in revenue, Palm posted a small profit for its fiscal third quarter ended March 1, soundly beating the expectations of analysts who had expected the company to suffer a loss for the quarter.

The Santa Clara, California, PDA (personal digital assistant) maker reported a net profit of US$2.9 million, or $0.01 per share, for the quarter ended March 1, the company said in a statement Thursday. That compares to a net loss of $1.9 million for the third quarter of 2001, Palm said.

Analysts polled by Thomson Financial/ First Call had Palm pegged to lose $0.04 per share for the period.

Revenue in the third quarter came in at $292.7 million, a 38 percent decline from $470.8 million in the year-ago period, Palm said.

Palm, which once stood virtually alone in the PDA market, has faced fierce competition from companies such as software licensee Handspring Inc. and other manufacturers using Microsoft Corp.'s PDA software. The company has promised an aggressive strategy to fight for its share of the market.

Palm shipped three new PDA products in the third quarter: the Palm i705 integrated wireless handheld for the corporate customer, and two color PDAs, the Palm m515 for the enterprise market and the Palm m130 for the first time user, the company said.

Palm shipped 1.3 million PDAs in the quarter, bringing its cumulative total of PDA shipments to 17.2 million, the company said.

In January it set up a subsidiary, PalmSource Inc., to commercialize its Palm OS operating system. PalmSource released beta software for Palm OS 5 to licensees and developers at the PalmSource Conference and Expo. Palm has a total of just over 200,000 registered developers of the Palm OS platform, it said. It expects to deliver the final version of Palm OS 5 to its hardware partners in June or July, the company said at a briefing in January.

Shares in Palm (PALM), which is traded on the Nasdaq stock exchange, closed higher on Thursday at $3.17 per share, an increase of $0.19, or 6.38 percent, for the day. Palm has experienced a 52-week high of $16 per share and a 52-week low of $1.35 per share.

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Laura Rohde

PC World

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