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Palm Posts Quarterly Loss, Lowers Guidance

Palm Centro
Achille Bigliardi
Palm Centro

Handheld computer maker Palm posted a quarterly loss after sales of its Treo smartphones were hurt by Apple'siPhone and other devices. The company also lowered guidance for the current quarter.

Palm, in its first financial report since it sold a 25% stake to private equity firm Elevation Partners, posted a fiscal first quarter net loss of $841,000, or 1 cent per share, from a profit of $16.5 million, or 16 cents per share, in the year-ago period.

Excluding one-time items, the Sunnyvale-based company said it would have earned $9.7 million, or 9 cents per share.

On that basis, Palm beat Wall Street's expectations. Analysts polled by Thomson Financial expected the company to report adjusted earnings of 8 cents per share on sales of $360.3 million.

Looking ahead, Palm said it expects second-quarter earnings in a range of 6 to 8 cents a share on revenue of $370 million to $380 million, which tracks below current consensus estimates of 10 cents a share in earnings on sales of $407 million.

Palm's earnings were released after the market closed. Shares fell 3% in extended trading.

During the quarter, the company announced a strategic relationship with Elevation Partners, which would invest $325 million in the company for a 25% ownership stake, resulting in a special $9 per share dividend for existing shareholders.

Palm has battled over the past year against increased competition--most notably, from Apple's foray in late June into the smart phone market with its iPhone.

Playing a bit of catch-up to its rivals, Palm last week unveiled a thinner and more affordable smart phone. The Centro, Palm's first major hardware redesign in years, will cost $99 with a two-year service contract when it becomes available later this month.

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