Palm Tops Forecasts but Slashes Outlook

Palm Inc. reported results in line with Wall Street expectations for its latest quarter but said slowing sales forced it to reduce its fiscal fourth-quarter projections. The leading maker of hand-held computers announced plans to cut about 250 jobs, or 15% of its work force.

The news sent Palm shares to as low as $10 in after-hours trading. They had closed the regular Nasdaq trading session at $15.50, up $1.06.

Palm said its operating earnings fell 41% to $9.3 million, or 2 cents a share, in its fiscal third quarter ended Feb. 28, a penny better than analysts expected. Revenue climbed 73% to $470.8 million.

The Santa Clara, Calif.-based company said it shipped 2.1 million devices in the quarter, up 112% from a year ago.

But the decelerating economy is expected to lead to flat sales growth in its fourth quarter, company executives said.

As a result, Palm expects a loss of 8 cents a share in its final quarter, on sales of $300 million to $315 million. It had been expected to earn 3 cents on sales of $572.6 million, according to First Call/Thomson Financial.

The company also has postponed construction of a new headquarters in San Jose that had been scheduled to begin this month, and it is reevaluating its real estate needs to reduce expenses, Bloomberg News reported.