Palm Shows Strong Hand

Updated from 4:56 p.m. EST

Palm(PALM), boosted by robust smartphone sales, on Thursday reported third-quarter earnings and revenue that surpassed analysts' estimates.

For the quarter ended Feb. 28, excluding items, the maker of the popular Treo earned 19 cents on sales of $388.5 million, compared with 10 cents and revenue of $285.3 million in the year-ago period -- a 36% increase.

On average, analysts polled by Thomson First Call forecast income of 16 cents a share and $374.7 million in revenue.

Investors cheered the news, immediately bidding shares up 7.7% after hours; shares recently traded up $1.07, or 5.3%, to $21.21.

For the current or fourth quarter, the Sunnyvale, Calif., company also topped guidance estimates, seeing non-GAAP EPS of 22 cents to 23 cents vs. analysts' consensus of 20 cents. It forecast revenue of $400 million to $405 million vs. the $397.51 million Street consensus.

Palm said it shipped 564,000 Treo smartphones in the quarter, more than twice the amount in the year-ago period. The company's share of the U.S. smartphone/PDA market also rose to 30%, up from 22% a year ago.

CEO Ed Colligan said that the company's "double-digit, year-over-year revenue growth and profitability" validated Palm's "decision to support multiple open platforms and offer a choice of smartphones based on either Windows Mobile or Palm OS."

In early February, one of the company's leading investors called on Palm's management to explore selling the company, warning of looming competition and commoditization of the smartphone market.

Palm shares closed the regular session ahead 47 cents to $20.14.

>To order reprints of this article, click here: Reprints