Two weeks ago, Palm (NSDQ: PALM) warned us that its Q3 revenues would be down, but they didn’t say anything about its devastating losses. Today, the company said it lost $98 million, or 89 cents a share in the third quarter, compared to a loss of $57 million, or 53 cents a share in the year-ago period. As expected, revenues fell to $90.6 million from $312.1 million in the third quarter 2008. That’s based on selling 482,000 Palms, which is almost 50 percent below normal. Palm attributes the decline to a maturing portfolio of devices. The silver lining, if you can call it that, is that the company has been able to raise about $100 million to ensure that it has enough cash to properly market its upcoming Palm Pre device and new mobile operating system. Palm CEO Ed Colligan said in a statement: “We’re proceeding through a challenging transitional period. Our current results shouldn’t overshadow the tremendous progress we’ve made against our strategic goals.”
Analyst Expectations: Palm reported non-GAAP earnings of $94.7 million, or 86 cents per share. AP reported that analysts, who base their expectations on this figure, had expected a loss of 59 cents, according to a Thomson Reuters (NSDQ: TRIN) poll. As for sales, analysts were expecting $105 million, compared to the $90.6 million actually reported.
More on cash and accounting policies after the jump…
Cash balance: From its stock sale, Palm received net proceeds of about $103.6 million after expenses, which is about equal to the amount of cash used in one quarter. It said it burned about $92.1 million in cash, leaving it’s balance of cash and equivalents at $219.4 million at the end of the period.
New accounting rules: Palm said it will recognize revenues from the Palm webOS products on a subscription basis and recognize it over a period of 24 months. It will do this because they will occasionally provide new software features free of charge to customers — much like how Apple (NSDQ: AAPL) accounts for the iPhone.
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