Palm layoffs follow disappointing quarterly revenue

The same week it announced sharply lower revenues for its second quarter, embattled handheld device maker Palm laid off 10 percent of its workforce.

More than 100 Palm employees were given pink slips last week, according to reports, which the company later confirmed without offering a specific number. Palm counts a staff of around 1,150 worldwide, but is in the process of reorganizing its business following a tough year.

The release of Apple's iPhone largely relegated Palm's Treo to second-class status, and the company has been slow to respond to competition from RIM's BlackBerry and other Windows Mobile providers such as Samsung and HTC.

In addition, Palm's Treo 755 saw a smaller rollout than expected due to certification problems, and the company shelved its plans to release "Foleo," a portable device bigger than a PDA but smaller than a laptop. Palm said it was also surprised to see many customers opting for its lower-priced Centro phones, which negatively affected the company's profit margins.

"Palm is working to sharpen its focus and better align resources behind core initiatives that will make the greatest impact to our business," Palm said in a statement. "To this end, and to ensure that our expenses are in line with projected revenues, we have made some reassignments and reductions in staff. This will better enable us to compete most effectively and ensure our long-term success."

Palm's revenue for its 2008 fiscal second quarter is expected to be around $345 to $350 million, lower than its $370 to 380 million estimate made in October. In the same quarter two years ago, Palm posted record revenues for the company of $444.6 million.

Interestingly, Palm made a strikingly similar declaration one year ago about its fiscal year 2007 second quarter. The company lowered its revenue estimates from between $430 million and $450 million to between $390 million and $395 million, blaming the shortfall on a delayed launch of the Treo 750 in the United States due to certification problems.

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