Palm

(PALM)

handed investors a morsel of good news Wednesday, surpassing Wall Street's second-quarter forecasts and making upbeat comments about coming periods.

The maker of handheld personal digital assistant devices posted a 6-cent-a-share loss on revenue of $290 million, down sharply from a year ago but above Wall Street estimates, which called for a loss of 7 cents on $253 million in revenue. Palm rose 13 cents ahead of the report to $3.32.

In the second quarter, revenue jumped 36% from the first quarter. Palm has regained a bit of momentum, posting two consecutive sequential top-line gains after a year-end plunge in fiscal 2001 culminated with a 65% fourth-quarter revenue decline.

It appears that streak, such as it is, will end at two: Palm projected a seasonal downtick in its third quarter, despite that period's planned launch of two high-profile products. Nonetheless, third- and fourth-quarter numbers should please Wall Street. The company projected a third-quarter loss of 5 to 7 cents a share on revenue of around $250 million to $260 million. In the fourth quarter, revenue will rise to $290 million to $300 million as Palm returns to break-even, the company forecasts. Both those revenue forecasts are substantially above current expectations, according to Multex.com.

The solid results in this and coming quarters may give Palm investors a rare reason to clap their hands, considering the plunge in the company's stock price since last year. In 2001 revenue plummeted disastrously as the company slashed prices to move products in a deteriorating consumer spending environment.

Palm achieved its recent revenue gains by cutting prices on older, low-end products such as its m100 family of devices. Palm's average selling price sank 26% in the second quarter from first-quarter levels, but the company sold 1.5 million devices in the latest quarter, compared with only 747,000 in the first quarter.

"I do not mean to suggest that all is well and Palm is back to business as usual," interim CEO Eric Behamou said. "Palm is still losing money." But he forecast that margins will rise to 30% in the fourth quarter from 21% now.

Palm said it will introduce during the current third quarter an integrated email device to run on the Mobitex network similarly to

RIM's

(RIMM)

BlackBerry. By the fall of 2002, Palm says it will produce a more comprehensive wireless device.

Earlier this week Palm selected

Texas Instruments

(TXN) - Get Report

as the primary chip vendor for handhelds based on the next version of its operating system. Palm will tailor the operating system to TI's chips, which are based on ARM technology that provides enhanced multimedia capability. Palm had worked with Motorola as its preferred supplier.

Meanwhile, competitor

Handspring

(HAND)

soaked up $10 million in much-needed capital Wednesday from new investor

Qualcomm

(QCOM) - Get Report

. Handspring has unveiled a combination mobile phone/PDA device due out this spring that's based on the European mobile standard GSM. The Qualcomm investment hints that Handspring will also produce a device based on Qualcomm-backed mobile phone standard CDMA. Handspring also hopes to raise $38.5 million on the market by offering 7 million shares at $5.50. Handspring rose 16% to $7.01.