Palm Pre Smartphone (click for larger image)

Palm on Tuesday said its revenue for the third quarter will be lower than what the market expected because of waning demand.

Palm said its revenue will be in the range of $85 million to $90 million, well below the $150 million that Wall Street expected. The smartphone maker blamed the tough economic times, late shipments of the Treo Pro for Sprint, and lower-than-expected sales of smartphones.

The decline in sales could be a self-inflicted wound, as many potential Treo owners may be waiting for the company's Pre smartphone. The touch-screen handset was unveiled to much fanfare at this year's Consumer Electronics Show, and the company is relying on it to take back market share from the likes of Apple's iPhone 3G and Research In Motion's BlackBerry line.

One of the appealing features of the Pre is webOS, which will be Palm's new operating system. The OS was designed from the ground up with Internet connectivity in mind, and it pulls in data from multiple Web services and aggregates it into a single finger-friendly interface. Palm said the platform was built on industry-standard technologies like CSS, XHTML, and JavaScript, which should make it simple to develop for.

"The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," Palm CEO Ed Colligan said in a statement. "Despite the challenging market environment, the extraordinary respond to the Palm Pre and the new Palm webOS reaffirms our confidence in the growing smartphone market."

For the third quarter, the company said it expects the cash used in operations to be between $95 million and $100 million. Palm said it has between $215 million and $220 million in cash and cash equivalents, and it's eyeing raising some more money to drive the launch of the Pre and webOS.

Smartphones are becoming increasingly capable of using enterprise-grade applications on the go, and they could ultimately be replacements for laptops. InformationWeek examined this issue in an independent report, and it can be downloaded here (registration required).