Palm, holding tight for Pre, reports Q3 earnings
Thursday's Palm Q3 2009 earnings call in a nutshell:
Analysts: Are we there yet? Palm: No. Analysts: Are we there yet? Palm: No. Analysts: Are we there yet? Palm: No. Analysts: Hey, are we there yet?
You can't blame them for asking. As predicted by virtually everybody, Palm is, as CEO Ed Colligan put it during the call, "proceeding through a challenging transitional period" as the company gears up for the Pre and the WebOS future. The firm on Thursday reported that total Q3 revenue for the quarter ended February 27 was $90.6 million; after expenses, there's a gross profit of $4.2 million. Total operating expenses were $106.4 million. The let loss for the quarter was $95 million; so far in FY 2009, Palm's net loss is $640.7 million.
Those numbers are actually slightly glummer than current Palm reality. As the company took pains to note during the call, the firm and its investors at Elevation Partners recently closed a public offering of common stock that not only recouped the $49 Elevation originally set out for the units, but netted Palm $103.6 million after all the fees and discounts were taken into consideration.
In other words, the anticipatory mood around Palm's Pre launch continues, but the mood's much darker with more or less all of Palm's other gadgetry. Smartphone sell-through is down 42% from last year, and smartphone revenue is down a wince-inducing 72%. To provide some perspective on the numbers? CFO Doug Jeffries during the call mentioned that the company was awaiting an insurance payout in the wake of a theft of some of their gear from a third-party site. According to the report, the "casualty loss" the company's sitting on while they wait is $4.982 million -- over three-quarters of a million dollars more than their gross profit.
Strange days indeed, but (aside from theft-related losses) no one can say it's unexpected travail. In fact, Colligan framed it as simply part of the path to Pre, stating that "it's easy to forget our tremendous progress... we're exceeding our own goals" for the quarter. The company's working on easing down inventory numbers on those older handsets, but the lion's share of questions revolved around the Pre and its whereabouts.
Palm officials expressed confidence that everything is on schedule and on track. There have been "no showstoppers" as the development and pre-manufacturing process wraps up, and the company says it's preparing to ramp up manufacturing now. What they're not prepared to do is drop so much as a hint of when in the next 15 weeks the Pre will reach the public.
And oh, the analysts tried, sometimes to comical effect. One vainly attempted to get numbers that might allow him to triangulate when the stores would be expecting their handsets. Another asked if Palm was going to eschew Apple-style fanfare and simply deliver phones to stores with no hoopla. (Colligan may or may not have been stifling a smile when he responded that "we're not gonna get into details on that," but your reporter is curious to know what brand of nighttime cold medicine would cause an analyst to theorize that a company desperately in need of a high-profile success and big publicity for it would try to launch the firm's last best hope for survival as if it were a box of car chargers.)
So, to answer everyone's question: No ship date on the Pre, no date to announce a ship date on the Pre. The company was also not so interested in discussing the patent situation, noting only that they're not exactly newcomers on the scene. They were more eager to discuss the Mojo applications framework, which which Palm said continues to be in private pre-release mode and is still slated to be released as a free download on the Palm Developer Network.
The company registered a loss of 89 cents per share for Q3; non-GAAP losses were 86 cents per share. Analysts has previously predicted a loss of 57 cents per share. Palm isn't releasing Q4 estimates at this time. The stock closed this afternoon before the call at $7.71; it's sitting at $7.26 in after-hours trading at press time.