Palm narrowed its loss in the fiscal third quarter and reported revenue above previously reduced estimates but smartphone sales for the Californian vendor are a huge concern. Revenues of US$349.9 million were slightly above the company’s reduced estimate of US$300 million to US$320 million, whilst Palm’s net loss of US$22 million, or 13 cents a share, in the third quarter compares with a year-ago loss of US$98 million, or 89 cents a share. However, the company only sold less than half of smartphones shipped in the period. Smartphone sell-through for the third quarter was 408,000 units, down 29 percent from the previous quarter and down 15 percent from a year ago. It shipped a total of 960,000 smartphones in the third quarter. CFO Doug Jeffries called the current quarter an “exceptional situation” in which Palm has to reduce the buildup of excessive inventory. Meanwhile Jon Rubinstein, Palm chairman and CEO, noted in a statement that the company’s recent underperformance has been “very disappointing,” but argued that its potential remains strong. “The work we’re doing to improve sales is having an impact, we’re making great progress on future products, and we’re looking forward to upcoming launches with new carrier partners,” he said. “Most importantly, we have built a unique and highly differentiated platform in webOS, which will provide us with a considerable – and growing – advantage as we move forward.”
Worringly, Palm warned that revenue in the current quarter ending in late May would fall to less than US$150 million. While that would be up from US$113.2 million a year earlier, the Wall Street Journal notes that it is far below the US$305.8 million projected by analysts and tallied by Thomson Reuters. The Financial Times adds that shares in Palm fell by 14 percent in after-hours trading last night following the third-quarter results report. Palm’s stock has fallen 40 percent since the start of 2010. Taking into account Thursday’s after-hours losses that took the stock down to US$4.86, Palm has lost half its value since the year began and is now trading back around the levels seen before the launch last year of the Palm Pre smartphone. The Wall Street Journal noted that although speculation has swirled about the possibility of Palm being acquired by another company, Mr. Rubinstein declined to comment beyond saying the board would look at any “reasonable offer.” He added that he was focused on building the company and its products.