Palm lowers Q3 revenue expectations

Palm now expects Q3 revenues of between $300m and $320m

Palm has revised down its predicted revenues for the third quarter of 2010 after disappointing sales, particularly of its flagship Pre device.

The company said in a statement that it now expects Q3 revenues of between $300m (£197m) and $320m (£210m), after consumers had failed to show sufficient interest its devices, despite positive reviews.

"Revenues for the quarter and full year are being impacted by slower than expected consumer adoption of the company's products that has resulted in lower than expected order volumes from carriers and the deferral of orders to future periods," the firm said.

Palm's yearly forecasted revenues will be below its previous prediction of between $1.6bn (£1bn) and $1.8bn (£1.2bn). The company will provide more details on its financial results during a results call on 18 March.

Jon Rubinstein, chairman and chief executive at Palm, was upbeat about the company's position despite the gloomy predictions, arguing that Palm webOS is regarded as a groundbreaking platform and that the company is confident of success.

"Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products," he said.

Ian Fogg, principal analyst at Forrester, said that he was not hugely surprised by the announcement, given Palm's relative size in the highly competitive smartphone market.

"Palm has always been very self-aware that it is a small company, and it has relied on operator partnerships to help push its products. The trouble is that if a launch doesn't go well its bottom line margins are at risk," he said.

Fogg explained that Palm's offerings are strong, but that the company had stagnated in recent months while the rest of the market had moved forward.

"Since the launch of the Pre 14 months ago Palm has not really moved on as much as it needed to. The Palm Pre Plus and Pixi devices are only basic evolutions, and what it needs now are products that jump to the next level," he said.