Palm to miss revenue targets by a substantial margin

The handheld manufacturer expects to post revenues some $30 million less than its original forecast due to shipping delays in a unnamed product.

Revenues are expected to be between $345 to 350 million dollars, well off of its $370 to 380 million estimate in October. Analysts believe the "product launch" was a wider rollout of the Treo 755p.

Other factors also contributed to the revenue cut, including larger warranty repair expenses, and a higher-than-expected percentage of sales of its low-priced Centro phone.


Either way, the news had a significant effect on the company's stock price. Shares fell 12.4 percent on Friday to close at $5.74, and were down another 1.4 percent in midday trading on Monday.

"We are disappointed that we did not get a key product certified for delivery in the quarter, but we are focused on realizing the long-term benefits and opportunities that inspired our transaction with Elevation Partners," Palm president and CEO Ed Colligan said in a statement.

Analysts say that while Palm may be down at this point, it is certainly not out. One pointed out that the company may have strength in its Windows Mobile-based Treos, which are growing faster than the overall Windows Mobile market for the last two quarters.

Palm can take solace in the fact that if it does expand the reach of its Windows-powered Treos -- as is expected -- the company could see some kind of a turnaround.

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