slashed sales forecasts for its fiscal third quarter, citing slowing demand in the high-end devices market.
The company now expects sales of $205 million to $210 million, compared with earlier estimates of $230 million to $250 million. Gross margins are expected to be around 30%, down from 31.4% in the prior quarter. Disappointing sales of the company's recently launched Tungsten T device sparked the lowered outlook. Palm plans to report quarterly results on March 20.
Shares of the Milipitas, Calif., company opened sharply lower, down 97 cents, or 8.4%, at $10.63, after falling more than 11% on Friday. J.P. Morgan cut its rating on the stock on Friday.
The world's most prominent handheld computer maker has been battling weakening demand for its organizers and wireless devices, as corporate spending has been slashed across the information-technology market. In February, the company discounted the price of its high-end device, but it was "not enough to offset market weakness for high-end products," the company said in a statement.
As part of its midquarter financial update, Palm also disclosed various one-time charges and expenses totaling more than $140 million. Among the charges is a $2.7 million charge related to two legal matters, and a charge of $40 million to $45 million related to the subleasing of vacant real estate. Other charges are related to restructuring and layoffs. Also among the charges is a $100 million noncash charge related to the writedown of the declining value of 39 acres of land it owns in San Jose.
Wall Street analysts expect the company to lose 34 cents a share on sales of $241.6 million, compared with a loss of 40 cents a share on sales of $292.65 million in the year-ago period, according to Thomson Financial/First Call.