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Palm Losses Widen

Sunnyvale, Calif.  — Palm reported wider losses in revenues and profits for the period ending November 30, while promising a “breakthough” smart phone in the first half next year.

Revenue fell to $192 million for the quarter, from $350 million for the same quarter last year. The company was also hit by a one time tax charge of $397 million, contributing to a net loss for the period of $506 million compared to a net loss of $9 million last year.

Operating expenses for the quarter fell to $116 million from $146 million a year ago.

Palm expects continued losses until it achieves a critical mass in shipments of new smartphones to be offered on a new software platform during the first half next year. One of its best selling products—the Centro—is “aging” as it is now a year hold. A business-aimed Treo Pro was also introduced during the last quarter.

The company has been hit by competition from Apple and Research in Motion in smartphones as well as unexpectedly sharp downturn in the economy.

“We’re working through an undeniably difficult period,” said president and CEO Ed Colligan, “but near-term challenges shouldn’t overshadow the fact that we are on track to deliver a breakthrough new platform and products that will bring a truly differentiated smartphone experience to our customers and reestablish Palm as a leading innovator in the mobile industry.”

During a conference call with analysts, Colligan was asked if the new Palm smartphone platform will offer touchscreens such as those on the iPhone. Colligan offered no product specifics, but said, “A lot of people think what’s in the marketplace is the best it will be. I think the best is yet to come….in innovation and unique applications.” There is also plenty of room for growth in smartphones, he said, and smartphones remain one of the few growth segments in the current recession.

Palm’s smartphone sell through for the quarter was 599,000 units, down 13 percent year over year. 

Traditional PDA sales fell to 158,000 units, down 51 percent from a year ago, as that segment declines. Palm said it is no longer producing new PDA models but will continue offering current products as sales are still significant and margins still healthy. 

 Last month Palm announced it is cutting its U.S. workforce, consolidating its European operations, and shifting responsibility for Asia Pacific sales, marketing and administrative support to its U.S. offices in order to reduce operating expenses.