Palm Earnings Beat Expectations - TheStreet

Palm

(PALM)

, the leading maker of handheld computing devices, reported Wednesday that its earnings more than doubled in its fiscal fourth quarter, exceeding Wall Street's expectations as demand for its products remained strong.

Excluding costs related to its spinoff from parent

3Com

(COMS)

, Palm's net income for the quarter ended June 2 jumped to $16.9 million, or 3 cents a diluted share, nearly 150% higher than its net income of $6.8 million, or 1 cent a share, reported a year earlier.

Wall Street analysts surveyed by

First Call/Thomson Financial

had expected the company to post earnings of a penny a share in the latest quarter.

Including the costs of splitting from 3Com, Palm earned $12.4 million, or 2 cents a share, in its fourth quarter.

Revenue doubled to $350.2 million in the latest quarter from $174.3 million in the fiscal fourth quarter of 1999.

Since the company went public in March, its shares have fluctuated wildly. After climbing to 165 a share on March 2, Palm's stock price tumbled as low as 19 7/8 about a month ago.

Palm's stock slipped 1/2, or 2%, to end regular trading at 26 3/8 Wednesday. But in after-hours trading, the shares rose 1 1/4, or 4.7%, to 27 5/8 following the earnings announcement.

Palm's results were stronger than those of its parent company. On Tuesday, 3Com

reported a fourth-quarter loss of $146.8 million, or 42 cents a share. Next month, 3Com, a networking equipment maker, will spin off to its shareholders the remaining 94% of Palm that it still owns.

Carl Yankowski, Palm's chief executive, said the visibility surrounding the initial public offering of the Santa Clara, Calif.-based company and its aggressive marketing efforts were major factors in increasing the total market demand and revenue growth for its handheld devices, despite industry-wide component shortages.

In its first quarter as an independent public company, Palm delivered more than 1.1 million of the pocket-sized computing devices, which store and transfer information to and from personal computers.

Earlier this week at the PC Expo in New York, Palm unveiled several new initiatives and products, including the addition of 25 new content providers and the introduction of an Internet kit that links Palm handheld devices with cell phones.

"While building on Palm's strength in devices, we also are committed to leading in the mobile Internet solutions and services space," Yankowski said in a statement following the earnings announcement.