Palm Spanks Estimates With a Loss

Investors are looking ahead to the possibility that a lower-priced version of the Pre called Pixie will arrive before the end of the year to help capture more of the holiday business.

Palm shares have risen 356% so far this year, as investors see the Pre as part of a vanguard of hot smartphones like Apple's(AAPL) iPhone and Research In Motion's (RIMM) BlackBerries, hitting the market.

Palm rose $1.74, or 12.4%, to $15.76 in after-hours trading Thursday.

A big reason for the stock surge is that Palm appears to be managing costs well. Palm had gross margins of 23% and burned through $72.4 million in cash. The company has $255 million in cash remaining, more than the $219.4 million it had at the end of the prior quarter. The upshot for Palm fans is that it means the company may not be forced to seek more financing right away.

Palm executives stuck with tradition and declined to give any financial guidance during the post-earnings conference call. But they did say they expect to turn cash-flow positive in the second half of next year.

Asked how the Pre launch was going, CEO Rubenstein said: "We are exactly where we hoped we would be. And we are seeing a lot of enterprise interest [business users]."

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