The biggest maker of handheld computers, Palm Computing, said that fiscal fourth-quarter sales would be about half its earlier forecast because of delays in shipping the new m500 model.
Palm also said that it has terminated the proposed acquisition of software company Extended Systems, because of a slowing economy.
Palm expects revenue in its fiscal fourth quarter to be between $140m and $160m, less than half its prior estimate which predicted sales of $300m to $315m.
The company's shares have tumbled 75 per cent this year as new versions of Palm organisers, like the m500, were delayed. The company reduced its fourth-quarter estimates in March, blaming parts shortages.
Palm CEO Carl Yankowski said the new m500 family of handheld computers will ship in volume later than the company had hoped, "precluding the opportunity for distributors, retailers and resellers to reorder in our fourth quarter."
Yankowski said the company was also forced to cut prices on its existing products by a larger amount than it had planned.
As for the Extended System deal, Palm and Extended Systems said the slowing economy and market conditions led both companies to conclude that a termination of merger plans would be best for the companies and their shareholders. The two companies said they have "mutually and amicably agreed" to end the deal which was valued at about $264m.
Though IDC predicts that Palm will continue to dominate the market until 2004, the analysts said Palm's long-term future is anything but secure.
"While existing Palm users are fiercely brand-loyal," IDC analyst Alex Slawsby said, "as the market expands, Microsoft has a strong brand recognition with people who are coming into the workforce today, given that a lot of them have grown up with Windows."
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