Palm past, present and future

A little past, present and future to round off the week for Palm, but hey! This is business, so let’s show the money. Palm, Inc. got over humpday yesterday by announcing some figures from their fourth quarter of fiscal year 2006. Cue those numbers: Revenue in the fourth quarter totaled US $403.1 million, up twenty percent from a year ago. Total revenue for the year was a sweet US $1.6 billion, up 24 percent over 2005.

And Treo revenue broke the billion-dollar barrier as well, netting US $1.1 billion in the quarter, up an insane 85 percent from a year ago. "Treo smartphone sales surpassed an important milestone — $1 billion in revenue for the fiscal year," said Palm president / chief executive officer Ed Colligan. An important milestone, indeed. You have to love the modesty of folks sometimes. Net income for the quarter was US $27.2 million, or US $0.25 per diluted share. Net income for the fourth quarter of fiscal year 2005 was US $17.7 million, or US $0.17 per diluted share.

Net income for the third quarter of fiscal year 2006 was US $29.9 million, or US $0.28 per diluted share. Net income in the fourth fiscal quarter measured on a non-GAAP basis totaled US $30.6 million, or US $0.29 per diluted share excluding certain minuses. Non-GAAP net income in the fourth quarter of fiscal year 2005 was US $19.2 million, or US $0.19 per diluted share. Revenue for the full fiscal year 2006 was US $1.6 billion, up 24 percent from 2005’s reported US $1.3 billion. Net income for fiscal year 2006 was US $336.2 million, or US $3.19 per diluted share; In fiscal year 2005, net income was US $66.4 million, or US $0.65 per diluted share.

Non-GAAP net income for fiscal year 2006 was US $88.5 million, or $0.85 per diluted share; in fiscal year 2005, this net income was US $78.9 million, or US $0.77 per diluted share. The numbers should come as no surprise. Palm is everywhere: The firm shipped approximately 4.7 million mobile-computing solutions during the fiscal year, including a whopping 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 phones and 495,000 handheld computers.

As for the past, Palm can look back on their recent implementations for Miyachi Unitek as a success story. Miyachi and Palm representatives today were able to announce some positive results from their recent projects. Miyachi had their email mobilized by Palm firstly. The approximately 40 Palm Treo 600s and 650s in the field have mobile messaging tied into the server. The results have been swell. One Palm higher-up claimed that wireless email was saved the firm seven hours per week. Project number two featured Miyachi Unitek rolling out mobile salesforce.com to their sales team, seeking to provide the sales team with instant mobile access to contacts, leads, opportunities, reports, quotes and such.

With the announcement, Palm vice president of enterprise markets Tara Griffin claimed that the recent spike in popularity (see above sales figures) is no spike: Palm Treos combined with advanced business applications are part of a growing trend in mobility, with greater numbers of applications are being pushed out to phones. In effect, said Griffin, Treo technology makes the handheld device a mobile office. Griffin also took the opportunity to cite the soon-to-be infamous Frost & Sullivan study showing that Treo smartphones had an average return on investment of two months and that field agents experienced productivity gains that equaled US $11,125 in average savings per agent per year.

Just released from Palm Inc. in conjunction with Telefonica Moviles Espana and Research In Motion was the availability of BlackBerry Connect software for the Palm Treo 650 smartphone in Spain. The Palm / Telefonica / RIM job seeks, via BlackBerry Connect augmenatation, to allow movistar enterprise and multinational customers to benefit from a wider range of devices compatible with BlackBerry services from movistar. With this expansion of the "BlackBerry from movistar" portfolio, Treo 650 smartphone customers can access features of the BlackBerry architecture via BlackBerry Enterprise Server. For corporate customers, BlackBerry Enterprise Server software tightly integrates with Microsoft Exchange and IBM Lotus Domino.

The Treo 650 smartphone with BlackBerry Connect is touted as featuring "Push" corporate email, which delivers messages wirelessly to the Treo 650 smartphone inbox; wireless calendar synchronization, which keeps the Treo 650 smartphone’s built-in calendar up to date remotely; attachment viewing so that users may view Excel, Word, PowerPoint, and PDF documents in original format; remote address lookup, which allows users to search their corporate directory wirelessly; and centralized device management, including support for IT policies such as over-the-air device disablement, a password device lock and Triple DES encryption.

John Hartnett, Palm senior vice president of worldwide sales and customer relations grandly stated that "The addition of an … email solution like BlackBerry Connect for movistar customers reaffirms Palm’s commitment to meet the needs of mobile professionals in Europe." He went on to say that “BlackBerry has been embraced by millions of mobile professionals around the world.” The figures quoted above would certainly seem to bear out Hartnett’s opinion. Of course, past performance is not indicative of future results, et cetera et cetera…and the future is always just out there. With respect to the fiscal year 2007 outlook, things look rosy. 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. As percentage of revenue, sales and marketing expenses are expected to come in between 13.1 percent and 13.6 percent on a GAAP basis. Estimates for research and development expenses figure to be between 10.0 percent and 10.5 percent, while general and administrative expenses are expected to be less than three percent on a GAAP and non-GAAP basis. And the operating margin is expected to be in the range of 7.5 percent to 7.8 percent. The Palm brain trust figures the fiscal year 2007 tax rate at 42 percent or so.

Stockholders are expected to be rewarded with between US $34 million and US $38 million. In quarter one, revenue is forecast at between US $380 million and US $385 million, with gross margin pegged for between 34.7 percent and 35.2 percent, operating expenses at approximately US $113 million, and earnings per diluted share are expected to be in the range of US $0.13 to us US $0.14 on a GAAP basis.

If those numbers look good, they should. While Palm’s steady growth is certain to end someday, the firm’s continued products should keep it at the top of would-be investor lists for a short while at least. "Our product engine is firing on all cylinders,” as Colligan put it, “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." Miyachi Unitek is a global supplier of equipment and systems for resistance welding, laser welding, laser marking, heat seal bonding and hermetic sealing. Telefonica Moviles Espana is the operator of Telefonica Moviles in the Spanish market.

As of April 2006, Telefonica Moviles had 20.3 million customers, claiming a presence in fifteen countries and having approximately 98.5 million customers. Movistar is the brand for the companies of Telefonica Moviles Group in the entire world with exception of Marruecos and Brazil. Research In Motion is a designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. With hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access.

RIM flagship products include the BlackBerry wireless platform, the RIM Wireless Handheld product line, software development tools, radio modems and software / hardware licensing agreements. RIM was founded in 1984 and is based in Waterloo, Ontario. Palm, Inc., a leader in mobile computing hawks products for consumers, mobile professionals and businesses such as their Palm Treo smartphones, Palm handheld computers, and Palm LifeDrive mobile managers.