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TheStreet Open House

Palm Slashes Estimates

Palm (PALM) cut expectations for its second fiscal quarter due to a failure to complete certification for its key Treo 750 smartphone.

Shares of Palm slumped more than 8% to $14.11 in after-hours trading following the announcement.

The handheld device maker said late Monday it now expects revenue of $390 million to $395 million, compared with its earlier guidance of $430 million to $450 million.

The company expects to earn 10 cents to 11 cents a share, compared with previous guidance of 15 cents to 18 cents a share.

Excluding items, Palm expects to earn 15 cents to 16 cents a share, down from its prior forecast of 20 cents to 23 cents a share.

On that basis, analysts polled by Thomson First Call were expecting the company to earn 22 cents a share on revenue of $442.6 million.

Palm expects to start shipping the Treo 750 for the U.S. market early in the third quarter of fiscal 2007, said Ed Colligan, CEO of Palm. "Our Treo 750v launch in Europe is doing quite well, and we expect international revenue for Q2 FY07 to be strong," he said in a press release.

The news is likely to jolt investors who have been betting on Palm , even as rival Research in Motion (RIMM) has had a big run on the markets. RIM shares hit a 52-week high on Friday before falling more than 4% amid Monday's broad downturn in tech stocks.

Shares of RIM were up nearly 1% to $136.38 following the Palm announcement.

Palm will report full results for second quarter on Dec. 19.

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