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Palm Posts $105 Million Loss

Palm has essentially bet its future on the success of its Pre smartphone and webOS operating system.

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Palm 'Pre' Smartphone
Palm reported a loss of $105 million for its fiscal fourth quarter, but it does have some reasons to be optimistic.

The company can take some solace in the fact that its eighth-consecutive quarterly loss was not as bad as many analysts has predicted. It may take further comfort from knowing that the quarter did not include the launch of the highly-anticipated Pre smartphone. Palm has essentially bet its future on the success of the Pre and the webOS operating system.

"The launch of Palm webOS and Palm Pre was a major milestone in Palm's transformation," said Jon Rubinstein, Palm's CEO, in a statement. "We have now officially reentered the race. We have more to accomplish, but the groundwork is laid for a very promising future here at Palm."

For the quarter, Palm sold 351,000 smartphones which accounted for about $86.8 million in revenues. It was a tough period for the company to sell devices such as the Treo Pro because potential buyers were likely waiting for the Pre to be released. In the three weeks since its launch, analysts estimate the Pre has sold more than 150,000 units. It is only available on Sprint's network.

Palm said webOS will be the operating system for its new lines of smartphones, and the OS has been generally well-received by the press. But the tools for building applications for webOS won't be available until the end of the summer.

The company said it is aiming to go after the "fat middle" of the smartphone market that lies between the business-heavy BlackBerry and the multimedia-centric iPhone.

But Palm is facing some stiff challenges moving ahead, as the smartphone market is increasingly being dominated by deep-pocketed competitors such as Apple, Nokia, Microsoft and Google.

The launch of the Pre was one-upped a few days later by Apple introducing a new iPhone, and lowering the price of the iPhone 3G to $99.

Most companies are just starting the hard work of mobilizing workforces by bringing the software they use to smartphones. InformationWeek analyzed this issue in an independent report, and it can be downloaded here (registration required).