MILPITAS, Calif.-PalmOne Inc. reported solid third-quarter results, and its stock enjoyed an upgrade from Bear Stearns, but investors appeared unhappy with the company’s outlook. PalmOne’s stock dropped 7 percent to $22.32 per share after its announcement.
PalmOne reported increasing revenues and positive earnings in its third quarter, but the company’s fourth-quarter outlook came in below an average of analyst expectations. For the third quarter, Treo maker PalmOne reported $285.3 million in revenues, up from the $242.5 million it scored during the same quarter a year ago. The company reversed its loss of $9.3 million from the same quarter a year ago to $4.4 million in the third quarter.
“We executed well and delivered strong revenue growth and gross margins during the quarter. Treo smart phone sell-through rose by almost 50 percent, and our share of the handheld-computer market expanded around the world,” said Ed Colligan, PalmOne’s president and interim chief executive officer. “Going forward, we’re committed to investing in our product-development engine and software-application differentiation. We’ll also work to accelerate the pace at which we bring our smart phones to new carriers and higher-speed networks.”
For its fourth quarter, PalmOne said its revenues will be between $320 million and $330 million, while its earnings per share will be between 20 cents and 27 cents. Analysts polled by Thomson First Call had predicted the company would make $353.7 million in revenues and would post higher earnings per share. PalmOne blamed its lowered outlook on products that it originally expected to ship early in the fourth quarter but will now ship either later in the fourth quarter or in the first quarter.
PalmOne is largely relying on sales of its new Treo 650 device, which is selling through Cingular Wireless L.L.C. but has yet to hit store shelves in Verizon Wireless stores. Indeed, PalmOne said it expects Treo sales to generate 50 percent of net revenues in its fourth quarter.
