Handspring net sales way up, profits down

First, Outpost.com, now Handspring has announced an increase in net sales, but a loss when it comes to gross margins.

The maker of Palm OS-based handhelds has announced revenues of US$123.8 million for the third quarter of fiscal year 2001 ended March 31. What’s more, quarterly revenues increased 261 percent compared to last year, and 7 percent over the previous quarter, reflecting strong demand for new products including the high-end Visor Platinum, Prism, and the new Edge models.

Continued expansion in the U.S. retail and reseller markets and new distribution channels in Italy, Australia and New Zealand also contributed to the strong quarter, according to Donna Dubinsky, founder and CEO of Handspring. Handspring also continued to see momentum of its Springboard expansion platform in the developer community, with over 10,000 developers registered and over 45 modules available, she added.

“We are pleased with the results of the quarter, particularly our ability to achieve revenue growth in what is usually a sequentially down quarter in our industry,” Dubinsky said in a statement. “We believe this growth demonstrates both acceptance of our new products as well as ongoing growth in the handheld computing sector in spite of an economic slowdown.”

Now for the downside. Handspring showed gross margins of 31.8 percent for the quarter, up from 31.4 percent the prior quarter. Excluding amortization of deferred stock compensation and intangibles and in-process research and development, Handspring reported a net loss of $6.7 million during the third quarter. Excluding these same costs, total operating expenses were $46.1 million, or 37.2 percent of revenue. Including amortization of deferred stock compensation and intangibles and charges of $12.2 million recorded for the Bluelark Systems acquisition, net loss for the quarter was $27.2 million.