Financials from smart-phone makers Research In Motion Ltd. and PalmOne Inc. indicate users are warming up to the expensive, high-end gadgets. However, sluggish results from Palm OS vendor PalmSource Inc. suggest that the rising tide is not lifting all boats.
“RIM is reporting another record quarter, and we are pleased with the momentum in the business,” said Jim Balsillie, RIM’s chairman and co-chief executive officer. “BlackBerry demand continued to grow in the first quarter as RIM and its partners continued to execute plans effectively in both enterprise and retail channels.”
Rival PalmOne also boasted of its device sales, specifically its line of Treo smart phones.
“We’re very pleased with the company’s performance during the quarter and the fiscal year,” said Ed Colligan, PalmOne’s president and chief executive officer. “Our carrier and channel partners reported very strong sell-through on Treo smart phones for the quarter-a 250-percent increase over the comparable quarter last year and 57 percent more than in the third quarter of fiscal year 2005.”
RIM scored 592,000 new BlackBerry subscribers in the quarter, bringing its total user base to 3.11 million. PalmOne shipped more than 1 million devices in its quarter, a number that includes its Zire, Tungsten, Treo and LifeDrive gadgets. Although PalmOne does not break out Treo sales, numbers from PalmSource indicate that PalmOne shipped around 400,000 Treos in the quarter.
Although smart-phone vendors RIM and PalmOne enjoyed a surge, PalmSource said it will cut 16 percent of its U.S. workforce as part of a reorganization. The company employs around 300 people. PalmSource also issued a revenue forecast below analyst expectations. Investors reacted harshly to the news, sending the company’s shares down 8 percent to $8.69 in trading.
“This reorganization reflects the evolution of our business model, as we have taken action to tighten our focus over the next 12 months,” said Jeanne Seeley, PalmSource’s chief financial officer. “By streamlining our product development efforts and administrative functions, and combining our sales, marketing and business development activities, we not only expect to increase internal synergies between these groups, but we are also aligning our cost structure with the reality that we are in a new product development period.”
PalmSource reported revenues for its fourth quarter of $17.3 million, which includes extra payments from PalmOne for the Palm OS license. The company a year ago recorded $17.7 million in revenues. PalmSource’s income was $18.3 million-boosted by the sale of its stake in the Palm brand-up from the $2.9 million net loss it recorded in the same quarter a year ago.
PalmSource forecast revenues in its first quarter of between $14.3 million to $14.8 million. Analysts polled by Thomson First Call predicted the company would post revenues of around $18 million. PalmSource has suffered from a dwindling number of Palm OS licensees and strenuous competition from the likes of Microsoft Corp. and Symbian.
For its part, BlackBerry maker RIM scored revenues of $453.9 million in its first quarter, way up from its $269.6 million in the same quarter of last year. The company posted a net income of $110.1 million. RIM did not provide any further news on its legal battle with patent-holding company NTP Inc.
RIM again boosted its revenue expectations for the coming months. It now expects $465 million to $490 million in revenue during its second quarter. Investors, however, appeared unmoved by the company’s outlook; RIM’s stock dropped slightly after the news to about $74.19.
Finally, PalmOne’s revenues popped up 26 percent from the year-ago quarter to $335.8 million, and its net income increased to $17.7 million. Investors sent the stock up slightly to $30.38 per share.
