Michael Singer
Handheld device maker Palm said its quarterly profits fell despite growing sales of its Treo smart phone.The California-based hardware company formerly known as PalmOne said its financial first-quarter revenues reached $18.2 million, or 35 cents a share. That's down from the $19.6 million, or 38 cents a share, that Palm reported in the period last year, which ended on Sept. 2.
Analysts were on average expecting a profit of 36 cents a share.
Excluding special items, the company posted a profit of 41 cents a share.
Palm president and CEO Ed Colligan said he was pleased with the momentum behind the Treo.
"We're clearly benefiting from wireless e-mail, but we are also positioned well with our Treo line as we see the transition to 3G networks and move from analog to digital media," Colligan during a conference call with analysts on Thursday.
Palm said it shipped 470,000 Treo units for the quarter, which represents an increase of more than 160 percent from the same time last year.
The company said nearly all of Palm's smart-phone shipments are for its Treo 650, which debuted in October 2004. The first Treo 600 sold in 2003 after Palm acquired the technology, and eventually the business, from Handspring.
Palm said its LifeDrive devices and Tungsten and Zire handhelds did not perform as well as Palm had hoped. The company blamed the drop in shipments of as much as 22 percent on a quiet European summer, lagging sales in the Asia-Pacific region and a decline in the demand for PDAs.
Colligan promised to improve video playback and camera capabilities on future models of the LifeDrive.
Despite success with its Treo, the company is currently lagging behind BlackBerry wireless e-mail maker Research In Motion and Nokia in the smart-phone category. Palm shipped 642,000 units last quarter, compared to 840,000 BlackBerry devices, according a Gartner report.
Market researcher Canalys said 12.2 million devices that could be classified as smart phones shipped between April and June of 2005, more than double the 5.9 million shipped in the same quarter a year ago.
For the next three months, Palm said it expects its revenue to be between $435 million and $440 million. The company's gross margin is expected to be in the range of 30 percent and 30.5 percent. Operating expenses on a GAAP basis are expected to be between $100 million and $102 million. Using non-GAAP accounting, operating expenses are expected to be between $97 million and $99 million.
Reuters contributed to this report.
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