Palm Reports Q2 FY09 Results
Palm, Inc. (NASDAQ:PALM) reported that total revenue in the second quarter of fiscal year 2009, which ended Nov. 28, 2008, was $191.6 million. Smartphone sell-through for the quarter was 599,000 units, down 13 percent year over year. Smartphone revenue was $171.0 million, down 39 percent from the year-ago period.
"We're working through an undeniably difficult period," said Ed Colligan, Palm president and chief executive officer, "but near-term challenges shouldn't overshadow the fact that we are on track to deliver a breakthrough new platform and products that will bring a truly differentiated smartphone experience to our customers and reestablish Palm as a leading innovator in the mobile industry."
The second quarter of fiscal year 2009 net loss applicable to common shareholders included a non-cash charge with a net impact of $396.7 million to the tax provision pertaining to the increase of the valuation allowance for the Company's U.S. deferred tax assets. This non-cash charge was the primary driver of a net loss applicable to common shareholders for the second quarter of fiscal year 2009 of $(508.6) million, or $(4.64) per diluted common share on a GAAP basis. The increase in the valuation allowance does not reflect a change in the company's outlook, nor does it alter the company's ability to utilize the underlying net operating loss carry forwards. "We have reserved against these assets in accordance with GAAP, however we still expect to utilize our net operating loss to offset future U.S. cash taxes once we become profitable," said Andy Brown, chief financial officer.
In addition to the tax provision charge, net loss applicable to common shareholders included stock-based compensation of $5.8 million, amortization of intangible assets of $0.9 million, restructuring charges of $8.3 million, impairment of non-current auction rate securities of $14.3 million and accretion of series B convertible preferred stock of $2.4 million. This compares to net loss applicable to common shareholders for the second quarter of fiscal year 2008 of $(9.6) million, or $(0.09) per diluted common share, which included stock-based compensation of $14.3 million, amortization of intangible assets of $1.0 million, restructuring charges of $10.1 million and accretion of series B convertible preferred stock of $0.8 million.
Net loss for the second quarter of fiscal year 2009, measured on a non-GAAP(1) basis, totaled $(80.2) million, or $(0.73) per diluted share, which excludes stock-based compensation, amortization of intangible assets, restructuring charges, impairment of non-current auction rate securities, accretion of series B convertible preferred stock and the non-cash net impact on the tax provision resulting from the increase of the valuation allowance for the Company's U.S. deferred tax assets. This compares to non-GAAP net loss for the second quarter of fiscal year 2008 of $(7.8) million, or $(0.07) per diluted share, which excluded the effects of stock-based compensation, amortization of intangible assets, restructuring charges and accretion of series B convertible preferred stock and adjusting the related income tax provision to 42 percent.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of fiscal year 2009 totaled $(84.5) million. EBITDA, adjusted to add back stock-based compensation, net other income (expense), restructuring charges and impairment of non-current auction rate securities, or Adjusted EBITDA, totaled $(55.8) million.
INVESTOR'S NOTE
Palm will host a conference call to review the complete Q2 FY09 financial results beginning at 1:30 p.m. PT / 4:30 p.m. ET. The conference call will be hosted by Ed Colligan, president and chief executive officer, and Andy Brown, chief financial officer. Investors and other interested parties are encouraged to listen to the call by logging onto the conference call webcast prior to the start of the conference call at Palm's Investor Relations website (http://investor.palm.com). Investors wishing to listen to the conference call via telephone may dial 866.362.4666 (domestic) or 617.597.5313 (international). There is no pass code required for the live call. A telephone replay of the conference call will be available through Dec. 29, 2008. The dial-in number for the replay will be 888.286.8010 (domestic) and 617.801.6888(international). The pass code 95409501 is required for the replay. An archive of the audio webcast and visual portion 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™ and Centro™ smartphones and Palm handheld computers, 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).
"We're working through an undeniably difficult period," said Ed Colligan, Palm president and chief executive officer, "but near-term challenges shouldn't overshadow the fact that we are on track to deliver a breakthrough new platform and products that will bring a truly differentiated smartphone experience to our customers and reestablish Palm as a leading innovator in the mobile industry."
The second quarter of fiscal year 2009 net loss applicable to common shareholders included a non-cash charge with a net impact of $396.7 million to the tax provision pertaining to the increase of the valuation allowance for the Company's U.S. deferred tax assets. This non-cash charge was the primary driver of a net loss applicable to common shareholders for the second quarter of fiscal year 2009 of $(508.6) million, or $(4.64) per diluted common share on a GAAP basis. The increase in the valuation allowance does not reflect a change in the company's outlook, nor does it alter the company's ability to utilize the underlying net operating loss carry forwards. "We have reserved against these assets in accordance with GAAP, however we still expect to utilize our net operating loss to offset future U.S. cash taxes once we become profitable," said Andy Brown, chief financial officer.
In addition to the tax provision charge, net loss applicable to common shareholders included stock-based compensation of $5.8 million, amortization of intangible assets of $0.9 million, restructuring charges of $8.3 million, impairment of non-current auction rate securities of $14.3 million and accretion of series B convertible preferred stock of $2.4 million. This compares to net loss applicable to common shareholders for the second quarter of fiscal year 2008 of $(9.6) million, or $(0.09) per diluted common share, which included stock-based compensation of $14.3 million, amortization of intangible assets of $1.0 million, restructuring charges of $10.1 million and accretion of series B convertible preferred stock of $0.8 million.
Net loss for the second quarter of fiscal year 2009, measured on a non-GAAP(1) basis, totaled $(80.2) million, or $(0.73) per diluted share, which excludes stock-based compensation, amortization of intangible assets, restructuring charges, impairment of non-current auction rate securities, accretion of series B convertible preferred stock and the non-cash net impact on the tax provision resulting from the increase of the valuation allowance for the Company's U.S. deferred tax assets. This compares to non-GAAP net loss for the second quarter of fiscal year 2008 of $(7.8) million, or $(0.07) per diluted share, which excluded the effects of stock-based compensation, amortization of intangible assets, restructuring charges and accretion of series B convertible preferred stock and adjusting the related income tax provision to 42 percent.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, for the second quarter of fiscal year 2009 totaled $(84.5) million. EBITDA, adjusted to add back stock-based compensation, net other income (expense), restructuring charges and impairment of non-current auction rate securities, or Adjusted EBITDA, totaled $(55.8) million.
INVESTOR'S NOTE
Palm will host a conference call to review the complete Q2 FY09 financial results beginning at 1:30 p.m. PT / 4:30 p.m. ET. The conference call will be hosted by Ed Colligan, president and chief executive officer, and Andy Brown, chief financial officer. Investors and other interested parties are encouraged to listen to the call by logging onto the conference call webcast prior to the start of the conference call at Palm's Investor Relations website (http://investor.palm.com). Investors wishing to listen to the conference call via telephone may dial 866.362.4666 (domestic) or 617.597.5313 (international). There is no pass code required for the live call. A telephone replay of the conference call will be available through Dec. 29, 2008. The dial-in number for the replay will be 888.286.8010 (domestic) and 617.801.6888(international). The pass code 95409501 is required for the replay. An archive of the audio webcast and visual portion 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™ and Centro™ smartphones and Palm handheld computers, 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).
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