Please refer to the December 10 podcast for our analysis of this news!

SUNNYVALE, Calif., Dec 06, 2007 (Press Release) -- Palm, Inc. (Nasdaq:PALM) today reported preliminary financial results for the second quarter of fiscal year 2008, ended Nov. 30. Full results will be reported Dec. 18.

Based on preliminary financial data, Palm expects revenue to be in the range of $345 million to $350 million for the second quarter of fiscal year 2008. This compares with earlier guidance of $370 million to $380 million provided Oct. 1, when Palm reported its first quarter fiscal year 2008 results. The revenue shortfall is primarily due to a delay in shipping a product that the company had previously expected to have certified within the quarter.

Gross margin is expected to be in the range of 29.3 to 29.8 percent on a GAAP basis and 29.5 to 30.0 percent on a non-GAAP basis, compared with earlier guidance of 33.3 percent to 33.8 percent on a GAAP basis and 33.5 percent to 34.0 percent on a non-GAAP basis. The gross margin reflects an unforeseen increase in warranty repair expenses during the quarter, a shift in product mix that included higher-than-expected shipments of Palm(R) Centro(TM) smartphones and the delayed product shipment.

Operating expenses are expected to be in the range of $146 million to $149 million on a GAAP basis and $121 million to $124 million on a non-GAAP basis.

Loss per diluted share is expected to be in the range of $(0.22) to $(0.24) on a GAAP basis and $(0.08) to $(0.10) on a non-GAAP basis. Loss per diluted share has been calculated on a GAAP and non-GAAP basis utilizing an estimated 40 percent effective tax rate. The determination of the effective tax rate for the second quarter of fiscal year 2008 will likely vary from the 40 percent utilized in these calculations and will be included in the full results announced on Dec. 18.

"We are disappointed that we did not get a key product certified for delivery in the quarter, but we are focused on realizing the long-term benefits and opportunities that inspired our transaction with Elevation Partners. We are pleased with recent improvements in our product delivery engine, the early success of Palm Centro, and the significant progress we've made on our strategic platform," said Ed Colligan, Palm president and chief executive officer.

Full results for the company's second quarter of fiscal year 2008 will be announced on Tuesday, Dec. 18, at the close of the market at 1 p.m. Pacific Time, and a conference call will follow at 1:30 p.m. Pacific/4:30 p.m. Eastern. The dial-in number is 866.314.5232 in the United States and 617.213.8052 for international callers. There is no passcode required for the call.

A telephone replay of the conference call will be available through Dec. 28, 2007. The dial-in number for the replay will be 888.286.8010 (domestic) and 617.801.6888 (international), passcode 49541582. An archive of the audio and visual portion of the conference call will be posted on Palm's Investor Relations website.

Related Links

Full press release on Palm.com

Palm Investor Relations

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