Updated from 5:14 p.m. EDT
reported fiscal fourth-quarter results that met its guidance and largely met consensus estimates, but lowered its guidance for the rest of the calendar year. It still expects to reach profitability by the last quarter of the calendar year.
Shares of the beleaguered handheld maker rallied 8 cents, or 4.71% to $1.78 today, in anticipation of a better quarter than last season's disappointing returns.
Handspring continued higher after posting results after the market close. Executives reasoned that part of the reason for last quarter's dismal results were that its new line of communicator devices, the Treo, was just beginning to ship to retailers and carriers. This past quarter's data provides a much clearer picture of the Treo's popularity in the market.
The company reported its net income loss narrowing to $15.4 million, or 11 cents a share, on sales reaching $49 million, compared with a net loss of 60 cents a share, on revenue of $61 million in the same period last year.
It just squeaked past Wall Street estimates of a 12-cents-a-share loss, on revenue of $49.19 million, according to a poll conducted by Thomson Financial/First Call.
For the full fiscal year 2002, which ended on June 29, the company reported a net loss of $91.6 million, or a 71-cents-a-share loss on revenue of $240.7 million, compared with a net loss of $126 million, or $1.21 per share on revenue of $370.9 million last fiscal year. Full-year results fell short of analyst expectations of a 59-cent loss on revenues of $242.89 million.
As expected, profit margins were driven sequentially higher from last quarter's dismal results. Margins were back up to 24.5%, compared with 9.2% for the previous quarter, driven largely by the introduction of new products into its portfolio, including a color version of the Treo, the Treo 270 and a slim non-wireless organizer, the Treo 90.
Handspring ended the quarter with $151.4 million in cash and investments, with $100.6 million of it unrestricted.
CEO Donna Dubinsky said the company is slashing its guidance for the next two quarters and for the full calendar year. For the September quarter, the company expects to pare down net losses to 7 to 10 cents loss per share, on revenues of $50 million to $60 million, with margins increasing moderately to 24.5% to 27%. In the December quarter, the company expects revenues of $80 million to $90 million, and gross margins to surge higher to 29% to 31.5%. It did not specify earnings targets for the December quarter. Overall, Handspring expects to log a 29 cents to 34 cents a share loss, on revenues of $239 million to $250 million for the calendar year. At the end of the last quarter, its earlier expectations were for a loss of 25 cents to 35 cents for the calendar year, on revenue of $290 million to $300 million.
"We believe that we need to be cautious in our revenue forecast, given the risks facing our business," Dubinsky told analysts, pointing out macroeconomic factors and service pushouts -- a subtle hint regarding
delays in rolling out its 1xRTT data network. Handspring is banking a chunk of its communicator sales on Sprint's network launch.
Treo sales lagged considerably, according to the company's figures. The company shipped about 93,000 units to date since its launch in the last few weeks of the prior quarter and about 40,000 have sold through to customers. Approximately 27,000 sold this past quarter. But for now, organizer sales, including the recently launched Treo 90, make up the lion's share of revenues, accounting for 55% of sales. Their wireless devices generate 39% of sales, with the remaining 6% driven by accessories and other items.
Dubinsky also told analysts that it no longer plans to move its offices, which will result in a "significant" one-time charge either this current quarter or next, as it seeks to sub-lease or negotiate a buy-out of the leases for its planned headquarters. Earlier this year, the company put down a $47.4 million in investments as collateral for the new facilities, which it could not access if the need arose.
The company expects to have $105 million to $115 million in cash and investments, with $65 million to $75 million in unrestricted funds on hand by the end of the September quarter. "This cash level should be sufficient to sustain us to profitability," Dubinsky said. But in tough times, getting access to stronger cash reserves may be the most important task.