Palm, taking $142.5 million in restructuring and asset impairment...
Palm, taking $142.5 million in restructuring and asset impairment charges, swung to $172.3 million 3rd-quarter loss from $2.9 million profit year earlier as revenue fell to $209 million from $292.7 million. At same time, Palm postponed planned spin- off…
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of PalmSource operating system subsidiary to midyear from spring, citing need to complete required filings. Delay comes despite Palm’s making what CEO Eric Benhamou termed “substantial progress” toward goal of making PalmSource free-standing company. Largest portion of Palm’s charges was $100 million write-down on value of 39-acre parcel of land in San Jose that it purchased for $160 million in 2001, but now is worth $60 million, CFO Judy Bruner said. It also took charges of $7.1 million to cover severance for 18% cut in work force and $22.4 million write-down of equipment and building in Cambridge, Mass. Palm sold 1 million handhelds in quarter, led by low-priced Zire ($99), down from 1.2 million year ago and 1.4 million in 2nd quarter. Average selling price rose to $169 from $160 year ago, but down from $183 in 2nd quarter, company said. Top performer was Zire, which has sold 850,000 units since shipping worldwide last Oct., company said. Palm’s newer models, including Zire, Tungsten T and Tungsten W, accounted for 49% of units shipped in quarter and 45% of revenue, Benhamou said. Palm Solutions, which is responsible for hardware, reported sales plunged 33% from year ago to $197.9 million, but those of PalmSource rose to $26.2 million from $20.4 million. PalmSource, which has 15 licensees including 8 that are marketing Palm OS-based product, reported $2.2 million operating profit, reversing $3 million operating loss year ago. Sales to Palm Solutions represented 59% of PalmSource revenue, with other licensees including Sony, accounting for rest. Late in quarter, Palm shipped “several thousand” units of its Tungsten W combo handheld PC/GSM-GPRS cellphone that’s being sold in U.S. for AT&T Wireless and other services. Downturn in revenue in quarter was attributed in part to lower-than-expected sales of Tungsten product. However, sales of Bluetooth-enabled Tungsten T spiked in Feb. after Palm lowered retail price month earlier by $100 to $399, Benhamou said.