PALM: Palm Buyout Can’t Occur Quickly Enough for Shareholders

By William Trent, CFA of Stock Market Beat

Palm Reports Q3 FY07 Results: Financial News – Yahoo! Finance

Palm, Inc. (PALM) today reported revenue of $410.5 million in the third quarter of fiscal year 2007, ended March 2. Smartphone sell-through for the period reached a company record high totaling 738,000 units, up 30 percent year over year and up 20 percent sequentially.

It’s too bad they can’t make any money doing it. Because of the chronic oversupply we’ve talked about previously, all those extra units did next to nothing for sales and shrunk the bottom line.

One year ago Palm did $388.5 million in sales, this year they did $410.5. That is 5.6% using my math. If you are talking sequential growth they did $392.9 million in the November quarter, so the sequential growth was only 4.5%. And the January quarter includes the holiday sales season and is presumably the strongest. One positive sign was that inventory declined both on a sequential and a year/year basis. However, it is unclear how much inventory remains in the sales channel.

How about the guidance? $400-$410 marks a sequential decline and a midpoint growth rate of 0.5% over last year’s $403.1 million. Oh, and the consensus estimate was $416.

If it weren’t for buyout rumors there is no way they would be selling at 21x trailing earnings.

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