Palm, Inc. today reported preliminary results for its second quarter of fiscal year 2009, which ended November 28, 2008.
Palm, like everyone else, is having financial difficulties in these rough economic times. We recently reported that Palm would be laying off as many as 200 people Worldwide, as part of restructuring its worldwide operations.
Palm expects to record revenues for Q2 fiscal year 2008 in the range of $190 million to $195 million.They expected declines since there has been a reduced demand for maturing smartphone and handheld products. Even though Palm expected those factors to pressure revenue in its November 2008 and February quarters, the difficult economic environment has greatly intensified the negative impact on product sales.
From the press release:
"We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products," said Ed Colligan, Palm's president and chief executive officer. "In order to ensure Palm's long-term success during these uncertain times, we're taking several steps to significantly reduce our cost structure. These measures will help us navigate this difficult period while launching our next-generation products as planned."
Besides the above mentioned reduction of Palm's workforce, Palm is currently implementing several other cost-savings initiatives, including cosolidating its Eurpean operations, and shifting responsibility for Asia Pacific sales, marketing and administrative support to its U.S. offices. Palm expects that by Q4 fiscal year 2009, these actions and other cost-savings initiatives will reduce quarterly operating expenses by approximately $20 million vs. Q1 fiscal year 2009 levels.
From the press release:
Separately, Palm stated that in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," it expects to record a valuation allowance on its U.S. deferred tax assets of approximately $400 million during the quarter. The increase in the valuation allowance does not reflect a change in Palm's outlook, nor will it alter Palm's ability to utilize the underlying net operating loss carry forwards.
I hope that the changes Palm makes will help them financially down the road. At least we had some good news last week in that Elevation Partners is pleased with Palm's progress and stated that they have a very long-term investment horizon and have no plans to exit their investment in Palm.
You can read the full press release here.