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9/18/2008
06:03 PM
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Palm Reports Fifth Straight Loss

The company reported a net loss of about $42 million, but sales of smartphones such as the Palm Centro were bright spots.

Palm reported its fifth straight quarterly loss Thursday, despite higher smartphone sales.

The company posted a net loss of $41.9 million for the three months ending Aug. 31, compared with a net loss of $841,000 for the same period last year. Revenue inched up to $366.9 million, compared with $360.8 million for the same time period last year.

Mainly buoyed by the Palm Centro, the company was able to ship more than 1 million smartphones during the quarter, a 49% increase from last year. The touch-screen Centro has been a bright spot for the company, and it has sold more than 2 million units in less than a year.

"I'm pleased with our momentum as we work to re-establish Palm as the leading innovator in the smartphone marketplace," said Ed Colligan, Palm's president and CEO, in a statement.

Despite the losses, Daniel Longfield, an industry analyst with Frost & Sullivan, remained optimistic.

"Palm's on pace for 50% to 60% year-over-year growth in sales, while the smartphone market as a whole is looking at 40% growth," Longfield said.

He said the company's pricing strategy with the Centro has been "spectacular," as most customers can get the handset for $99 after rebates and subsidies. This price point widens the market substantially, as does the smartphone's availability on three of the four major U.S. carriers.

Once the dominant U.S. smartphone maker, Palm has been increasingly losing market share to the likes of Research In Motion and Apple. Longfield said Palm's recent handsets with Windows Mobile -- the Treo 800w and Treo Pro -- could make it a more attractive option for enterprise users.

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