Palm reported the company's Q3 FY2010 results after the close of market on Thursday. For the period ending Feb. 26, 2010, the total revenues on a GAAP basis were $349.9 million. Gross profit and gross margin on a GAAP basis were $47.0 million and 13.4 percent, respectively.
The updated guidance Palm provided in February was for revenues to be in the range of $285 million to $310 million on a GAAP basis and in the range of $300 million to $320 million on a non-GAAP basis.
In a prepared statement, Jon Rubinstein, Palm chairman and CEO said:
"Our recent underperformance has been very disappointing, but the potential for Palm remains strong. The work we're doing to improve sales is having an impact, we're making great progress on future products, and we're looking forward to upcoming launches with new carrier partners. Most importantly, we have built a unique and highly differentiated platform in webOS, which will provide us with a considerable - and growing - advantage as we move forward."
A story appearing in The Wall Street Journal online, addressed the inventory situation:
Chief Financial Officer Doug Jeffries called the current quarter an "exceptional situation" in which Palm has to reduce the buildup of excessive inventory. Palm said it shipped 960,000 smart phones in the latest quarter, but only sold 408,000 devices to consumers due to declining sales of its older devices and a slowdown after the holidays. That leaves about 552,000 phones in stores that the company still needs to sell.
"At the end of the day, the results are still poor," said Shaw Wu, an analyst with Kaufman Bros. "Knowing that they had too much inventory, why did they ship even more units?"
On the conference call, Palm said Q4 revenue will be less than $150 million, as the company helps its carrier partners (Sprint and Verizon) work through excess inventory.
From our sister site, PreCentral.net, Derek Kessler wrote about the earnings call:
First - we'll just say at the outset that our longstanding concern about passion and knowledge about webOS inside Verizon was confirmed and then some - CEO Jon Rubinstein alluded to the challenges Palm faced launching after Droid a few times. Our favorite was when he expressed his own opinion which is pretty much mirrors ours:
"We had an arrangement with Sprint that when we launched with Sprint that they would invest in marketing and carry the product and for that they would get an exclusive for a period of time. That really determined when we could do our launch at Verizon. I agree with your premise that if we could have launched at Verizon earlier, prior to Droid, that we would have gotten the attention that the Droid got and since I believe that we have a better product, I think we would have even done better."
For more of Derek's analysis, go here.
More reaction can be found here.
Palm's stock dropped 14% in extended trading on Thursday to a new 52-week low of $4.84.
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