PalmSource ( PSRC) was getting killed Friday morning after the company reported a decline in third-quarter earnings and said it would lose money in the current period. The shares were recently down $3.11, or 14%, to $18.80. After the bell Thursday, the former software arm of PalmOne ( PLMO) reported a third-quarter profit of $600,000, or 5 cents a share, compared with earnings of $734,000, or 7 cents a share, last year. Revenue slipped from $26.3 million to $21.6 million. The company said it expects to lose $4 million to $7 million in the fiscal fourth quarter on revenue of $17 million, plus or minus 5%. Two analysts surveyed by Thomson First Call were expecting the company to break even in the quarter on revenue of $17.7 million. The company burned about $2.2 million in the third quarter and ended it with $33.3 million of cash, equivalents and restricted investments.