Palm Quarter 1 Revenues up 2006

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Palm shares were up more than 3 percent on the heels of the company’s first-quarter earnings report, a grab-bag of news on the company’s fortunes. The report included an uptick in revenue, depressed profit and a near-term strategy of foregoing profit in favor of increased revenue and market-share building.

Palm posted revenue of $355.8 million for the quarter ending Sept. 1, slightly above analysts’ expectations and up 4 percent over the year-ago quarter. The company had warned earlier this month that revenue would fall short on slow sales of its Treo devices. Net income for the quarter was $16.5 million, a figure that reflected the first time Palm included expenses for stock options for employees. That was down from $18.2 million in the year-ago quarter.

The company’s guidance reflected a strategy of emphasizing revenue and market share development over profits. The numbers did not please Wall Street analysts, however; Palm forecast revenue between $430 million and $450 million, in contrast to Wall Street expectations of $472 million. The company did not reaffirm earlier, long-term guidance for the rest of the fiscal year.

Palm’s second-quarter strategy includes expanding its geographic reach, particularly in Europe, and launching a lower-priced Treo during the holiday season to meet the competitive challenge from RIM, Nokia and Motorola Inc.—all of which have recently launched devices that combine productivity and multimedia features at a price point designed to make consumers swoon and buy.

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