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palmOne Q4 and FY05 Results
Press Release:
MILPITAS, Calif., June 30 /PRNewswire-FirstCall/ -- palmOne, Inc. (Nasdaq: PLMO) today reported that revenue in its fourth quarter of fiscal year 2005, ended June 3, totaled $335.8 million, up 26 percent from the year-ago period and marking the eighth consecutive quarter of year-over-year growth. Quarterly revenue was up 18 percent sequentially.
Net income was $17.7 million, or $0.35 per diluted share. This compares to net income for the fourth quarter of fiscal year 2004 of $13.3 million, or $0.27 per diluted share, and net income for the third quarter of fiscal year 2005 of $4.4 million or $0.09 per diluted share.
Net income in the fourth fiscal quarter, measured on a non-GAAP(1) basis, totaled $19.2 million, or $0.37 per diluted share, excluding the effects of amortization of intangible assets and deferred stock-based compensation, employee separation costs and restructuring charges. This compares to non-GAAP net income in the fourth quarter of fiscal year 2004 of $15.9 million, or $0.32 per diluted share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation and restructuring charges.
The company also generated positive cash flow of $36.5 million from operations in its fourth quarter of fiscal year 2005.
"We're very pleased with the company's performance during the quarter and the fiscal year," said Ed Colligan, palmOne president and chief executive officer. "Our carrier and channel partners reported very strong sell-through on Treo smartphones 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."
Among the quarter's other business highlights was the expansion of Treo(TM) 650 smartphone availability in the United States with Verizon Wireless and with EarthLink Wireless; in Canada on the Rogers Wireless high-speed EDGE(2) network; in Australia with Telstra Mobile; in France, the UK and Switzerland with Orange; in Holland with KPN; in Spain with movistar (Telefonica Moviles Espana); in Italy with Telecom Italia Mobile (TIM); in Argentina on Personal's EDGE Network; in Mexico with Telcel's EDGE network; and in Venezuela through Digitel TIM -- most of which involved carrier customization prior to commercial availability.
In addition during the quarter, the company also:
Introduced the Tungsten(TM) E2 handheld, featuring Bluetooth(R) wireless technology, to build on the popular Tungsten E, which had been the top-selling handheld in all U.S. channels for 18 months, using data from The NPD Group. Combined sales of the Tungsten E and Tungsten E2 accounted for approximately 22 percent of the total U.S. retail market in April and May 2005;
Created a new category of mobile-computing device for business productivity and entertainment applications with the introduction of the LifeDrive(TM) mobile manager. It features a hard drive and two wireless technologies, Wi-Fi and Bluetooth;
Realized carrier- and channel-reported sell-through to end-user customers of 442,000 Treo smartphones vs. 126,000 in the comparable quarter last year and 282,000 in the third quarter of fiscal year 2005;
Acquired full rights to the Palm(R) brand, ending co-ownership of the brand with PalmSource, Inc.; and
Extended the license for Palm OS(R), ensuring the capability to develop Palm Powered(TM) products through 2009.
Fiscal Year 2005 Results
Revenue for the full fiscal year 2005 was $1.27 billion, up 34 percent from the $949.7 million reported in fiscal year 2004. Net income for fiscal year 2005 was $66.4 million, or $1.29 per diluted share, compared with net loss of $21.8 million, or $0.55 per diluted share, for fiscal year 2004. Non- GAAP net income for fiscal year 2005 -- excluding the effects of amortization of intangible assets and deferred stock-based compensation, employee separation costs and restructuring charges -- was $78.9 million, or $1.54 per diluted share. That compares with a fiscal year 2004 non-GAAP net income -- excluding the effects of amortization of intangible assets and deferred stock-based compensation, restructuring charges and loss from discontinued operations -- of $8.0 million, or $0.19 per diluted share.
"We concluded 2005 with very good results across virtually every key financial metric," said Colligan. "We introduced several innovative products, and we enter fiscal year 2006 with an optimistic outlook for continued growth and profitability."
palmOne shipped approximately 4.5 million Zire(TM), Tungsten, Treo and LifeDrive family devices during its fiscal year 2005, and more than 1 million devices during the fourth quarter of fiscal year 2005. To date, palmOne has shipped more than 30 million units.
Q1 Fiscal 2006 Guidance
In its pending conference call to investors today, the company will provide forward guidance for the first quarter of fiscal year 2006. The quarter's guidance includes the following:
Revenue is expected to be between $330 million and $335 million;
Gross margin is expected to be in the range of 30 percent to 31 percent;
Operating expenses on a GAAP basis are expected to be in the range of $87 million to $89 million, and non-GAAP operating expenses are expected to be in the range of $84 million to $86 million. This includes approximately $2 million in costs associated with moving to a new headquarters and changing the company name to Palm, Inc.; and Earnings per diluted share on a GAAP basis in the range of $0.24 to $0.29 and on a non-GAAP basis of $0.30 to $0.35.
Campus Move and Temporary Shutdown
palmOne is preparing its move to new corporate headquarters. On Tuesday, July 5, we can be reached at our new corporate address: 950 W. Maude Ave., Sunnyvale, Calif., 94085-2801.
The main telephone number at the new facility will be 408-617-7000. All individual telephone numbers will change. Email addresses will continue unchanged until July 14, when they will transition to [email protected]. Email with a palmOne.com address will continue to be forwarded for several months.
New Company Name and Ticker
The company will adopt a new name -- Palm, Inc. -- on July 14, 2005, and begin trading on the Nasdaq exchange with a new ticker symbol -- PALM.
INVESTOR'S NOTE: The company today will hold a conference call for the public at 6 a.m. Pacific/9 a.m. Eastern to discuss matters covered in this news release. The dial-in number is 800-510-0178 with a passcode of 34525667 in the United States and 617-614-3450 for international callers, with the same passcode of 34525667. A telephone call replay of the conference call will be available through July 8, 2005, beginning today at approximately 5 p.m. Pacific. The domestic dial-in number for the replay is 888-286-8010 and for international callers, it is 617-801-6888, with a passcode of 96750224 for both. The live conference call also will be available over the Internet by logging onto the investor relations section of palmOne's website at http://ir.palmOne.com . An audio replay and text transcript of the conference call also can be accessed at the same URL beginning today at approximately 6 p.m. Pacific.
NON-GAAP FINANCIAL MEASURES -- To supplement the company's consolidated financial statements presented in accordance with GAAP, palmOne uses non-GAAP measures of certain components of financial performance, including operating income (loss), net income (loss) and per share data, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results. These non-GAAP results are among the primary indicators management uses as a basis for planning and forecasting of future periods and facilitating management's internal comparisons to the company's historical operating results and comparisons to competitors' operating results. In addition, because palmOne has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company's financial reporting. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non- GAAP financial measures may also be different from non-GAAP financial measures used by other companies. Consistent with the company's practice, the non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding palmOne's expected first quarter of fiscal year 2006 revenue, gross margin, operating expenses and earnings per share, our ability to grow our business and our ability to be profitable. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially, including, without limitation, the following: fluctuations in the demand for palmOne's existing and future products and services and growth in palmOne's industries and markets; palmOne's ability to forecast demand for its products; possible defects in products and technologies developed; palmOne's ability to introduce new products and services successfully and in a cost-effective and timely manner; palmOne's ability to timely and cost-effectively obtain components and elements of its technology from suppliers; palmOne's ability to compete with existing and new competitors; palmOne's dependence on wireless carriers and ability to meet wireless-carrier certification requirements; palmOne's ability to utilize its net operating losses. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in palmOne's most recent filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the fiscal quarter ended February 25, 2005 and its Annual Report on Form 10-K for the fiscal year ended May 28, 2004. palmOne undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.
About palmOne, Inc.
palmOne, Inc. -- a leader in mobile computing -- strives to put the power of computing in people's hands so they can access and share their most important information. The company's products include Treo(TM) smartphones, the LifeDrive(TM) mobile manager, Tungsten(TM) and Zire(TM) handhelds, and software and accessories.
palmOne products are sold through select Internet, retail, reseller and wireless operator channels throughout the world, and at palmOne Retail Stores and palmOne online stores (http://www.palmOne.com/stores ).
More information about palmOne, Inc. is available at http://www.palmOne.com .
(1) GAAP stands for Generally Accepted Accounting Principles.
(2) EDGE service not available in all areas. Please see service coverage map for details.
NOTE: palmOne, Palm, Palm OS, Palm Powered, Zire, Tungsten, Treo and LifeDrive are among the trademarks or registered trademarks owned by or licensed to palmOne, Inc. or its subsidiaries. The Bluetooth word mark and logos are owned by the Bluetooth SIG, Inc. and any use of such marks by palmOne, Inc. is under license. All other brand and product names are or may be trademarks of, and are used to identify products or services of, their respective owners.
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