Despite strong sales for the Treo smartphone, Palm's PDA business caused the firm to report a drop in income in the most recent quarter.

Revenue increased 25 per cent to $342.2m, while net income was down 7.1 per cent to $18.2m year-over-year.

The Palm Zire and Palm LifeDrive PDAs failed to excite European and Asian consumers, and shipments of Palm's handheld computers dropped 22 per cent.

Chief executive Ed Colligan said that he was "pleased" with the results, however. The company saw sales of its Treo smartphone increase by 160 per cent to 470,000.

Palm purchased the rights for the Palm brand name from PalmSource in May. PalmSource was acquired by Japanese browser maker Access earlier this month. 

Loosening the ties between the two companies allows Palm to move beyond Palm OS devices. The software is blamed for the limited appeal of the devices as enterprise users are looking for a system that can be integrated easily with existing Windows PCs.

Analysts have indicated that Palm is already working on a Windows powered version of the Treo.