Quarter 3 conference call summary
As always, Handsprings quarterly conference call provided much to talk about. What follows is a basic summary of the more intresting points made in that call.
First off, the money.
Handspring posted revenue of $59.7 million dollars this quarter down 15% from last quarter’s $75.5 million. They are still in the red though, with losses being 14 cents a share. They broke down the numbers which provide an interesting look on how successful the Treo is. Note that as of March retail sales figures, Handspring has 18% of the PDA market. (2nd place)
% of revenue
53% == 34.1 million dollars came from Visor sales
35% == 21 million dollars came from Treo sales
12% == 7.3 million dollars came from Springboard and accessories sales.
Of total revenue, 19% (11.5 million) came from out of the US. Most of this revenue appears to have come from the sale of Treos.
Handspring is comparing the Treo to the launch of the original Palm Pilot. At first there were some bugs, people are wondering what to do with the device - how to integrate it into their lives, but soon they say it will catch on and people will see what it is worth. They believe that the Treo line is incomplete, even with the 270 and the CDMA version, which suggests that there are new features/form factors to come down the line from Handspring.
47,000 Treos were shipped this quarter; of those Handspring estimates that 13,000 were sold. They noted that the Treo takes a lot more customer service rep training, (dealing with software, accessories, servers, etc) and more communication between salesperson and customer for it to be sold. They notice that while retail has this experience the carriers do not.
Handspring did an initial survey of Treo users, as previously stated on the discussion boards. They found out some general demographics such as most Treo users are male, well educated, have high income, and are professionals. They also invetigated what what people thought of the Treo. 94% of the 600 surveyed said they are satisfied, with 88% willing to recommend it to others.
One of the biggest achievements Handspring claims to have made this quarter was the dealings that they made with the carriers. They signed 12 new relationships, most of them international, and later today or tomorrow they are going to announce the availability of the Treo in Australia (ToolKit, be happy now!), with carriers Optus and Vodafone.
The carriers want 3G, and so does Handspring. Donna stated that they want the always on email, inferring that the success of the RIM has never gone unnoticed. They also hope that with the GPRS upgrade latency will be cut back greatly from what it is now, making it much quicker to go online and off. The GPRS update should come summer 2002.
The Visor hasn't been forgotten, and neither have the users. Donna talked about how they hope to start more seeding programs, user group activities, and event based programs in the near future for first adopters to help spread the word. Word of mouth appears important to them.
One of the more important statements was almost a direct clarification to what Donna Dubinsky said last quarter referring to the future of the Visor.
"We are not abandoning the organizer market"
Handspring talked about how being second place in the market gives them opportunities for promotional activities, name recognition and more. Currently it appears that the Visor line has a very small profit margin for Handspring.
They also mentioned a new device which will be released soon. Most likely middle May. This device while not radical will be different from everything else in the market. It is a new line, yet fits into Handsprings communicator strategy. More on my thoughts about this are in a future article.
I got the impression that Handspring seems undecided at the corporate level on what to do with the organizer business. It appears to have lost money for them or at least make very little, yet it gives them a huge market. Web sales are strong in the US for Handspring, especially for the Treo, where more Treos have been sold online than in retail so far. One might conjecture that this would extend to the Visor line also.
Handspring has more than $100 million in useable cash right now, yet is still losing money. When they do make a profit, they expect to have about $60 million of cash on hand to use. They continue to develop new ideas, and have made and broken their own objectives for things like the Treo. The Visor isn't being abandoned just yet, and Handspring doesn’t see the entire market converging to Treo devices for at least another couple of years.