Palm Reports Q4 and Record FY 2006 Results
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Treo Revenue of $1.1B in FY 2006, up 85% from FY 2005
SUNNYVALE, Calif., June 29, 2006 — Palm, Inc. (Nasdaq: PALM) today reported that revenue in its fourth quarter of fiscal year 2006, ended June 2, totaled $403.1 million, up 20 percent from the year-ago quarter. For the full fiscal year 2006, revenue totaled $1.6 billion, up 24 percent from fiscal year 2005.
Net income for the quarter was $27.2 million, or $0.25 per diluted share. This compares to net income for the fourth quarter of fiscal year 2005 of $17.7 million, or $0.17 per diluted share, and net income for the third quarter of fiscal year 2006 of $29.9 million, or $0.28 per diluted share.
Net income in the fourth fiscal quarter, measured on a non-GAAP(1) basis, totaled $30.6 million, or $0.29 per diluted share, excluding the effects of amortization of intangible assets and deferred stock-based compensation, legal settlements, restructuring charges, the related income tax provision and the partial reversal of our valuation allowance against our deferred tax assets. This compares to non-GAAP net income in the fourth quarter of fiscal year 2005 of $19.2 million, or $0.19 per diluted share, which excluded the effects of amortization of intangible assets and deferred stock-based compensation, employee separation costs and restructuring charges.
“Treo smartphone sales surpassed an important milestone — $1 billion in revenue for the fiscal year,” said Ed Colligan, Palm president and chief executive officer. “Our product engine is firing on all cylinders as evidenced by our recent introductions of both the Treo 700w and the Treo 700p, each of which offers a different operating system, 3G radios and robust application suites, and we delivered these products to multiple carriers simultaneously. We enter fiscal year 2007 as a strong leader, capable of delivering on the rich potential of mobile computing on a global scale.”
Fiscal Year 2006 Results
Revenue for the full fiscal year 2006 was $1.6 billion, up 24 percent from the $1.3 billion reported in fiscal year 2005. Net income for fiscal year 2006 was $336.2 million, or $3.19 per diluted share, compared with net income of $66.4 million, or $0.65 per diluted share, for fiscal year 2005. Non-GAAP net income for fiscal year 2006 — excluding the effects of amortization of intangible assets and deferred stock-based compensation, legal settlements, restructuring charges, the related income tax provision and the reversal of our valuation allowance against our deferred tax assets — was $88.5 million, or $0.85 per diluted share. That compares with a fiscal year 2005 non-GAAP net income — excluding the effects of amortization of intangible assets and deferred stock-based compensation, employee separation costs and restructuring charges — of $78.9 million, or $0.77 per diluted share.
Installed Base
Palm shipped approximately 4.7 million mobile-computing solutions during fiscal year 2006, including 2.3 million Treo™ smartphones and 2.5 million Palm handheld computers. During the fourth quarter of fiscal year 2006, Palm shipped approximately 623,000 smartphones and 495,000 handheld computers. To date, Palm has shipped almost 36 million units.
Guidance (2)
With respect to the fiscal year 2007 outlook, Colligan added, “As we deliver new products and expand internationally, we expect growth to accelerate throughout the year.”
Fiscal Year 2007 Guidance: (2)
* Revenue growth is expected to be between 20 percent and 25 percent;
* Gross margin on a GAAP basis is expected to be between 33.8 percent and 34.8 percent, and, on a non-GAAP basis, between 34 percent and 35 percent;
* As a percent of revenue, sales and marketing expenses are expected to be between 13.1 percent and 13.6 percent on a GAAP basis and between 12.5 percent and 13.0 percent on a non-GAAP basis;
* As a percent of revenue, research and development expenses are expected to be between 10.0 percent and 10.5 percent on a GAAP basis, and on a non-GAAP basis, between 9.2 percent and 9.7 percent;
* As a percent of revenue, general and administrative expenses are expected to be less than 3 percent on a GAAP and non-GAAP basis;
* Operating margin is expected to be in the range of 7.5 percent to 7.8 percent on a GAAP basis and between 9.0 percent and 9.3 percent on a non-GAAP basis;
* The tax rate on a GAAP basis is expected to be 42 percent and, on a non-GAAP basis, 40 percent; and
* FAS 123R stock-compensation expense, before taxes, is expected to be between $34 million and $38 million.Q1 Fiscal Year 2007 Guidance: (2)
* Revenue is expected to be between $380 million and $385 million;
* Gross margin is expected to be in the range of 34.7 percent and 35.2 percent on a GAAP basis and between 35.0 percent and 35.5 percent on a non-GAAP basis;
* Operating expenses on a GAAP basis are expected to be in the range of $113 million to $114 million and on a non-GAAP basis between $105 million and $106 million;
* Earnings per diluted share are expected to be in the range of $0.13 to $0.14 on a GAAP basis and $0.18 to $0.19 on a non-GAAP basis; and
* FAS 123R stock-compensation expense, before taxes, is expected to be between $9.0 million and $9.5 million.
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