Palm to restructure yet again, may cut more jobs

In what could be its last hope at survival, after the markets closed Monday evening, Palm announced it would implement a program to reduce its costs by another 20%, on top of a program that was already under way.

Last year at this time, Palm trimmed its workforce by about 100, and gambled the future of the company on the success of its low-end Centros. The plan worked, though it backfired in an odd way: Specifically, the success of, and high demand for Centro drove the company's margins lower, which made its expenses weigh more than they would have otherwise.


But this month, Palm may wish it were back at 2007. After the markets closed this afternoon, the company announced it expected to record revenues for its fiscal second quarter just ended that won't top $195 million. This after posting revenue for its previous fiscal Q2 2008 of about $345 million. The reason this time: declining demand for its smartphones across the board.

Palm CEO Ed Colligan issued this statement late this afternoon: "We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products. In order to ensure Palm's long-term success during these uncertain times, we're taking several steps to significantly reduce our cost structure. These measures will help us navigate this difficult period while launching our next-generation products as planned."

Two weeks ago, Palm announced its latest round of layoffs, and today confirmed that process of attrition is ongoing. However, this afternoon, the company suggested many of those being laid off could be in Asia Pacific, as it transfers responsibility for sales to that region to the US.

Last August, Palm told analysts it would shift its emphasis toward its higher-end Treos, which could presumably earn it higher margins.

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