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Wednesday, October 03, 2007
 Palm Still Struggling
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Message Text: Palm, Inc. has released the results of its most recent financial quarter. Just as the company had warned investors recently, it did not earn a profit, and doesn't expect to this quarter, either.

Revenue for the June-August period was $360.8 million, of which $302.2 million came from its smartphones.

Net loss for the quarter was $800,000, or 1 cent per share. This compares to net income for the same period last year of $16.5 million, or 16 cents per diluted share.

This is the first unprofitable quarter Palm has had since 2003.

Struggling in a Time of Plenty

At a time when sales of smartphones of all kinds are surging, Palm appears to have been the company most hurt by the introduction of Apple's iPhone.

Many of Palm's competitors, like RIM, concentrate on business users and so saw little effect from Apple's consumer-oriented smartphone. Palm, on the other hand, saw many of its potential customers turn to the iPhone.

Still, 689,000 Treos shipped last quarter, up 21 percent year over year. Palm's smartphone revenue was up 12 percent from the year-ago period.

There can be little doubt Palm realizes it needs new, more competitive products; it spent roughly $12 million more on research and development last quarter than it did during the same quarter of 2006.

Looking Forward

Palm doesn't see things turning around immediately. It said today that revenue during its current financial quarter is expected to be between $370 million and $380 million, leading to a loss of 1 to 3 cents per share.

"As we move toward completing the recapitalization transaction with Elevation Partners, we are excited to strengthen our ability to accelerate Palm's growth in the future," said Ed Colligan, Palm president and CEO.
 
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