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PalmOne Q1 Results

Mon Sep 20, 2004 - 4:06 PM EDT - By Michael Ducker

We'll have coverage of the conference call, held today at 5 PM EST on Tuesday.

palmOne, Inc. (NASDAQ:PLMO) today reported revenue of $273.1 million for the first quarter of fiscal year 2005, ended Aug. 27, which is up 62 percent from the $168.6 million reported during the comparable quarter a year ago.

Net income was $19.6 million, or $0.38 per share. This compares to net loss from continuing operations in the year-ago period of $16.9 million, or $0.57 per share.

Net income in the first quarter of fiscal year 2005, measured on a non- GAAP(1) basis, totaled $21.9 million, or $0.43 per share, excluding the effects of amortization of intangible assets and deferred stock-based compensation. This compares to a non-GAAP net loss in the first quarter of fiscal year 2004 of $14.1 million, or $0.48 per share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation and restructuring charges.

"Our handheld and smartphone solutions performed very well in the marketplace. Outstanding products plus operational excellence resulted in strong growth and profitability," said Todd Bradley, palmOne chief executive officer. "Excitement is mounting in our category, and we're confident that our innovative products coupled with our excellent distribution through retail and carrier channels will help us maintain and extend our market leadership."

Bradley noted the following financial highlights:

* Revenue grew 62 percent, marking the fifth consecutive quarter of
year-over-year growth;
* Unit sales of handheld computers was up 10 percent vs. the year-ago
* Gross margin rose to 33.3 percent in the quarter, compared to 30.5
percent in the fourth quarter of fiscal year 2004 and 28.1 percent
in the comparable quarter a year ago;
* Operating margin was 8.5 percent, and non-GAAP operating margin was
9.3 percent;
* Net income was $19.6 million, and non-GAAP net income totaled $21.9
* Inventory turns rose to 44 times compared with 21 times in the year-
ago period; and
* The company generated $31.3 million in cash from operations in the

During the quarter, palmOne announced an expansion of its relationship with T-Mobile, bringing the Treo(TM) 600 smartphone to the carrier's retail customers and online store in addition to its existing business channel, and a new carrier relationship with Verizon Wireless, the nation's largest wireless carrier. Today, Treo smartphones are sold by the five largest carriers in the United States, in addition to leading carriers around the world. Since the quarter ended, palmOne announced a second carrier in Canada -- Bell Mobility -- and its first in Spain -- Vodafone.

palmOne shipped approximately 981,000 Zire(TM), Tungsten(TM) and Treo family devices during its first fiscal quarter -- bringing the total number shipped to-date to approximately 27.4 million.

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