Palm warns of profit drop

Palm warned that its first-quarter results could be weaker than expected.

After canceling its controversial Foleo product and continuing to struggle with a shift away from the personal digital assistant market, Palm warned on Wednesday that its upcoming earnings report could be weaker than expected.

For the quarter ending August 31, Palm will lose US$0.01 per share or break even, the company said. Earlier, the company had said it expected a loss of US$0.01 or a gain of US$0.01 in the period. That compares with a gain of US$0.35 per share in the same quarter last year.

Palm also narrowed its revenue forecast to between US$359 million and US$361 million, instead of the previously expected US$355 million to US$365 million.

Palm will release its quarterly earnings report on October 1.

The company is facing challenges as it changes its business from one focused on PDAs to one that specializes in smart phones. Earlier this month, Palm announced it wouldn't ship the Foleo, a companion product to its Treo smart phone, as planned. When the device was announced, analysts said it would be too expensive and wouldn't offer valuable features. Palm said it decided to focus instead on its own software platform that is due out in 2008 or 2009.

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Nancy Gohring

IDG News Service

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