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Palm Narrows Loss; Sales Beat Forecasts

June 25, 2003|From Times Wire Services

Palm Inc., the world's largest maker of hand-held computers and the software that runs them, said Tuesday that its fourth-quarter loss narrowed and sales outpaced its forecasts, sending shares up as much as 10%.

The net loss narrowed to $15 million, or 51 cents a share, in the quarter ended May 31 from $27.5 million, or 95 cents, a year earlier, Palm said in a filing with the Securities and Exchange Commission. Sales fell 3.2% to $225.8 million from $233.3 million, a smaller drop than it forecast in March.

Palm this month agreed to acquire Handspring Inc., a smaller rival started by the executives who created Palm's first organizers, to bolster its business by gaining Handspring's line of cellular phones that double as hand-held computers. Palm's sales have fallen from their 2001 peak, and the company recorded a $442.6-million loss for its fiscal year just ended.

"They're stable in a tough market," said Ray Sharma, an analyst with BMO Nesbitt Burns Inc., who thinks Palm will benefit from the planned acquisition of Handspring and doesn't own the stock.

"Even in a tough market, Palm and Handspring will have the ability to grow."

Shares of Palm rose as high as $17.29 in after-hours trading after the release of the results. The shares had fallen 57 cents to $15.70 in regular trading on Nasdaq. Handspring shares rose as high as $1.25 after the announcement. They had been unchanged at $1.06 in regular Nasdaq trading.

In other earnings news Tuesday:

* Good Guys Inc., the San Francisco-based electronics chain, said its loss in the fiscal first-quarter ended May 31 nearly doubled to $8.4 million, or 31 cents a share, from a deficit of $4.6 million, or 18 cents a share, a year earlier. Sales fell 16% to $143.4 million.

Sales at stores open at least a year -- a key measure of growth -- fell 14%. Chairman Kenneth Weller said widespread industry price cutting more than offset the firm's lower operating costs.

* Park Place Entertainment Corp., the world's biggest casino company, said second-quarter earnings may fall less than it forecast because business improved in May and early June.

Net income will fall to 11 cents to 15 cents a share from $96 million, or 31 cents, in the year-ago period, Las Vegas-based Park Place said.

Last month, the company had estimated profit of as much as 11 cents. Park Place owns and manages casinos under the Caesars, Bally's and Hilton names in Las Vegas; Atlantic City, N.J.; and other markets.

Analysts had expected profit of 10 cents a share, according to a Thomson First Call survey.

* American Greetings Corp., the world's largest publicly traded greeting-card maker, said earnings in its fiscal first-quarter ended May 31 fell 56%, to $19.7 million, or 27 cents a share, after retailers such as Kmart Corp. closed stores and because of debt-repayment costs. Sales fell 6.2% to $454.3 million.

* Kroger Co., the largest U.S. supermarket chain and owner of Ralphs stores in California, said its fiscal first-quarter earnings rose 15%. Full-year profit may be less than forecast because of price cuts and increased promotions amid slower consumer spending.

Net income climbed to $351.5 million, or 46 cents a share, from $305.2 million, or 38 cents, a year earlier. Revenue in the quarter ended May 24 rose 3.8% to $16.3 billion, while sales at stores opened at least a year dropped 0.2%, the Cincinnati-based company said.

* Gannett Co. forecast second-quarter earnings of $1.19 to $1.20 a share as it begins to emerge from an industry-wide slump in advertising.

Gannett Chief Financial Officer Gracia Martore released the earnings forecast, which falls between analysts' estimates of $1.15 to $1.23, but cautioned investors that "the last several days of a quarter do matter."

* Belo Corp., which owns broadcast and cable TV outlets and publishes the Dallas Morning News and the Press-Enterprise in Riverside, says it expects second-quarter earnings to fall below Wall Street's consensus estimate, citing a slow advertising market and higher expenses.

Dallas-based Belo said it expected earnings of 33 cents a share as costs increased amid a rise in pension and medical insurance costs. Wall Street analysts, on average, expected Belo to post earnings of 36 cents a share, according to a survey by Thomson First Call.

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