Updated from 4:29 p.m. EDTSAN FRANCISCO -- Disappointed investors sent shares of Palm ( PALM) down nearly 5% after the smartphone maker reported a first-quarter loss and guided below analysts' expectations for the second quarter. Palm said Monday that it lost $841,000, or 1 cent a share, compared to a profit of $16.5 million, or 16 cents a share, a year ago. Excluding charges, the company posted earnings of $9.7 million, or 9 cents a share, beating Street expectations by a penny. Revenue for the quarter grew slightly to $360.8 million, above analysts' expectations of $359.9 million. Revenue mix for the quarter was 84% smartphones and 16% handhelds. Shares of Palm were recently off 77 cents, or 4.9%, to $15.22 in after-hours trading. Smartphone revenue for the quarter was up 12% from a year ago to $302.2 million. The average selling price for smartphones declined to $431 per device due to a "higher mix of newer products that command lower prices and additional mail-in rebates for older models," said Palm. The company's handhelds business declined 33%. Gross margin for the quarter decreased to 36.3% compared with 37.1% in the year-ago period and 38.3% sequentially. The reduction in gross margin is largely a result of new products being introduced at "aggressive price points" to expand its reach in the market, said Palm.