Palm posts wider-than-expected loss

SAN FRANCISCO, USA: Palm Inc reported a wider-than-expected quarterly loss as consumer demand for its smartphones was hurt by increased competition, sending shares down 4 per cent on Thursday.

Investors worried about Palm's hefty costs as it tries to turn around its business and about increasing competition from phones based on Google Inc's Android system at Sprint Nextel, the only U.S. operator that sells Palm's Pre and Pixi phones.

Palm's report contrasted with stronger-than-expected results at Research In Motion, which also forecast strong demand for the current quarter.

Both companies face competition from rivals such as Apple Inc's iPhone.

On a conference call with analysts, Palm itself cited lower-than-expected consumer demand among Sprint customers, who also had a choice of Android phones from HTC Corp and Samsung Electronics.

Palm reported a net loss of $81.9 million, or 54 cents a share, in its fiscal second quarter ended Nov. 30, versus a year-ago net loss of $506.2 million, or $4.64 a share.

Excluding items, Palm posted a loss or 37 cents a share, which was wider than the average analyst forecast for a loss of 32 cents, according to Thomson Reuters I/B/E/S.

Analysts noted that Palm's expenses are high as it tries to turn around the business by pushing phones based on its new webOS mobile system.

"Number one, when do they sign more carriers beyond Sprint here in the U.S?" said Shaw Wu, an analyst at Kaufman Bros. adding, "At what time can they leverage their spending?"

The company said it shipped a total of 783,000 smartphone units during the quarter, up 41 per cent from last year.

But smartphone sellthrough units - which reflect how many phones actually end up in consumers' hands - totaled only 573,000, which was down 4 per cent from the year-earlier period and 29 per cent lower than the previous three months.

"Sell through, which reflects sales from carrier customers to subscribers, was disappointing. We thought it would be disappointing and it was even weaker than we expected," said Matt Thornton, an analyst at Avian Securities.