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Analyzing Palm's Post-Earnings Conference Call

Palm Treo
AP
Palm Treo

Palm reported a better-than-expected third quarter financial performance, but softer-than-expected guidance for its fourth quarter, with top company executives refusing to comment on the growing speculation of an impending merger or leveraged buyout.

"We're just not going to comment on the rumors and speculation," CEO Ed Colligan told analysts and reporters listening in to the company's after-earnings conference call. "We're focused on running our company and driving our stand-alone plan."

Chief Financial Officer Andrew Brown also said on the call: "There's a lot of rumors and speculation out there. We're just not going to comment on that stuff."

Recent reporting has speculated that a merger with Motorola , that

Motorola Razr
AP
Motorola Razr

sources valued at roughly $2 billion, was expected to be announced before the markets opened for trading Thursday morning. But Motorola's surprising earnings pre-announcement after the market closed Wednesday may have derailed those plans. Motorola reported that it now expects an 8 to 9 cent loss per share instead of the 17 cent profit the Street had anticipated.

Both companies' shares were hit hard today on Wall Street.

One analyst who spoke to CNBC was intrigued by the company's record-setting smartphone shipments during the Third Quarter on only slightly better than expected revenue. Palm reported selling 738,000 smartphones during the quarter. The Street anticipated something under 700,000, with Deutsche Banc anticipating 688,000 units. The company sold 600,000 units during the second quarter. Another analyst said this could be "window dressing," with Palm trying to make itself look even more attractive to a possible suitor, like Motorola.

Another analyst on the call was surprised by the decrease in operating expenses during the quarter, especially in light of the increased competition the company faces from companies like Research in Motion and the upcoming iPhone from Apple .

The analyst asked, "Because you are exploring (mergers and acquisitions), are you clamping down on spending?"

"I think there were some minor areas where...spending was lower than expected. We're certainly committed to driving our market opportunities going forward," Colligan said.

"What you need to understand is we are running the business, as an independent supplier of mobile computing products into the marketplace. End of story," said Brown, Palm's CFO.

The company has scheduled an all-hands meeting of Palm employees tomorrow morning at company headquarters in Silicon Valley. A company spokesperson says Palm always holds these kinds of confabs with employees post-earnings, and people shouldn't read anything unusual into it.



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