(Source: Business Wire)
Palm, Inc. (NASDAQ:PALM) today reported that total revenues in the fourth quarter of fiscal year 2009, ended May 29, 2009, were $86.8 million. Gross profit was $20.1 million and gross margin was 23.1 percent. These results include the effects of subscription accounting treatment required by GAAP.(1) In accordance with this methodology, revenues and cost of revenues for the Palm® Pre smartphone are deferred and recognized over the product's estimated economic life.
To facilitate comparisons to Palm's historical results, Palm has included non-GAAP adjusted measures, which exclude the impact of subscription accounting, stock-based compensation and other items detailed later in this release. The company believes this information will help investors better evaluate its current period performance and trends in its business.
On a non-GAAP basis, Adjusted Revenues in the fourth quarter totaled $113.2 million, Adjusted Gross Profit was $30.4 million and Adjusted Gross Margin was 26.8 percent.
"The launch of Palm webOS and Palm Pre was a major milestone in Palm's transformation; we have now officially reentered the race," said Jon Rubinstein, Palm's chairman and chief executive officer. "We have more to accomplish, but the groundwork is laid for a very promising future here at Palm. Our senior management team is capable, motivated and focused on execution; there is a large group of developers waiting to build great applications for Palm webOS; and we have a new product pipeline that we think will set a standard for the industry."
The company shipped a total of 351,000 smartphone units during the quarter, representing a 6 percent increase from the third quarter of fiscal year 2009 and a year-over-year decline of 62 percent. Smartphone sell-through for the quarter was 460,000 units, down 5 percent vs. the third quarter of fiscal year 2009 and down 52 percent year-over-year.
Net loss applicable to common shareholders for the fourth quarter of fiscal year 2009 was $(105.0) million, or $(0.78) per diluted common share. This compares to a net loss applicable to common shareholders for the fourth quarter of fiscal year 2008 of $(43.4) million or $(0.40) per diluted common share.
On a non-GAAP basis, Adjusted Net Loss for the fourth quarter of fiscal year 2009 was $(53.4) million, or $(0.40) per diluted share. This compares to an Adjusted Net Loss for the fourth quarter of fiscal year 2008 of $(23.9) million, or $(0.22) per diluted share.
The company's cash, cash equivalents and short-term investments balance was $255.1 million at the end of the fourth quarter of fiscal year 2009. This total includes the $103.5 million in net proceeds from the company's public equity offering, which took place in March. Cash used in operations for the fourth quarter of fiscal year 2009 was $72.4 million.
Fiscal Year 2009 Results
Total revenues for the full fiscal year 2009 were $735.9 million. Gross profit for fiscal year 2009 was $159.8 million and gross margin was 21.7 percent. The company shipped a total of 2,407,000 smartphone units during the year, representing a 25 percent decline vs. the prior year. Smartphone sell-through for the full year was 2,570,000 units, down 19 percent year-over-year.
Net loss applicable to common shareholders for fiscal year 2009 was $(753.5) million, or $(6.51) per diluted common share, which included a net non-cash charge of approximately $397 million pertaining to an increase in the reserves for the company's U.S. deferred tax asset. This compares to a net loss applicable to common shareholders for fiscal year 2008 of $(110.9) million, or $(1.05) per diluted common share.
On a non-GAAP basis, Adjusted Revenues totaled $762.3 million, Adjusted Gross Profit was $171.1 million and Adjusted Gross Margin was 22.4 percent for the full fiscal year 2009.
On a non-GAAP basis, Adjusted Net Loss for fiscal year 2009 was $(241.1) million, or $(2.08) per diluted share. This compares to an Adjusted Net Loss for fiscal year 2008 of $(36.2) million, or $(0.34) per diluted share.
Investor's Note
Palm will host a conference call to review its fourth-quarter and fiscal year 2009 financial results at 4:30 p.m. Eastern (1:30 p.m. Pacific). Investors and other interested parties are encouraged to listen to the call via audio webcast at Palm's Investor Relations website (http://investor.palm.com). Investors and other interested parties wishing to listen to the conference call via telephone may dial 866.356.4441 (domestic) or 617.597.5396 (international). There is no pass code required for the live call. A telephone replay of the conference call will be available through July 2, 2009. The dial-in number for the replay will be 888.286.8010 (domestic) and 617.801.6888 (international). The pass code 26667932 is required for the replay. An archive of the audio webcast of the conference call will be posted on Palm's Investor Relations website at http://investor.palm.com.
About Palm, Inc.
Palm, Inc. is a leading mobile products company, creating instinctive yet powerful mobile products that enable people to better manage their lives on the go. The company's products for consumers, mobile professionals and businesses include Palm® Treo, Pre and Centro phones, as well as software, services and accessories.
Palm products are sold through select Internet, retail, reseller and wireless operator channels throughout the world, and at Palm online stores (http://www.palm.com/store).
More information about Palm, Inc. is available at http://www.palm.com.
NON-GAAP FINANCIAL MEASURES: Palm utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. Palm considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. Ongoing operations are the ongoing revenues and expenses of the business, excluding certain costs that Palm does not anticipate to recur on a quarterly basis and eliminating the effect of the revenues and cost of revenues deferrals under subscription accounting for Palm webOS (Palm Pre) products. While Palm uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance and to provide incremental insight into the underlying factors and trends affecting both the Company's performance and its cash-generating potential, Palm does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Palm believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance and enables investors to more fully understand trends in its current and future performance. In assessing the overall health of its business during the three months and fiscal years ended May 31, 2009 and 2008, Palm excluded items in the following general categories, each of which are described below:
Subscription Accounting/Deferred Revenues and Deferred Cost of Revenues. Palm began selling Palm Pre smartphones, the first Palm webOS product, during the fourth quarter of fiscal year 2009. Because Palm may provide unspecified services and additional software products to customers of its Palm webOS products in the future free of charge, GAAP requires that Palm recognize revenues and cost of revenues for these products on a straight-line basis over the currently estimated economic product life, or 24 months, with any loss recognized at the time of sale. This accounting treatment, referred to as subscription accounting, results in the deferral of most of the revenues and cost of revenues during the quarter in which Palm Pre smartphones are sold to the customer.
