Palm Awaits Future Products As Revenues Decline - InformationWeek

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6/26/2008
08:00 PM
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Palm Awaits Future Products As Revenues Decline

The company continues to struggle with a reported a loss of $43.4 million, despite the success of the Centro.

Continuing its downward trend, Palm announced a loss in its fiscal fourth quarter as Research In Motion and Apple continue to grab a larger share of the smartphone market.

For the three months ending May 31, Palm reported a loss of $43.4 million, or 40 cents per share. Last year, the company had a fourth-quarter profit of $15.4 million, or 15 cents a share. Revenue also dwindled, falling to $296.2 million from $401.3 million for the same period last year.

The company said revenue fell because of slowing sales of older Treo phones, and this is the fourth consecutive quarterly loss for Palm. The company lost $111 million for all of fiscal year 2008, compared with a profit of $56.4 million in fiscal 2007.

A bright spot for Palm has been the Centro, an entry-level device that has appealed to first-time smartphone buyers. The company has sold more than 1 million Centro handsets since its debut last fall.

It was a major factor in the company's selling a record 968,000 total phone units in the quarter. But the Centro normally costs $99 with a carrier contract, leading to a less-lucrative margin than Palm's other devices.

"The Centro is a smash success. We have a competitive product pipeline and are developing a world-class software platform. I expect together these efforts will develop positive results in the coming years," Palm CEO Ed Colligan said during a conference call to investors.

The company is expecting to have new Windows Mobile-based Treos on the market next quarter, but RIM should have its latest BlackBerry devices out by then. Additionally, Apple's iPhone 3G will be a significant draw for potential Centro users with an attractive $199 price point.

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