(Updated with stock price and comments from Palm)

Palm

(PALM)

blew past estimates with better-than-expected losses and strong sales.

The Sunnyvale, Calif.-based smartphone maker posted an adjusted loss, excluding one-time items, of $53.4 million, or 40 cents a share. That is a wider loss than the $23.9 million, or 22-cent loss in the year-ago period. Analysts were looking for a loss of 62 cents a share, the midrange between estimates as low as a 27-cent loss and as much as 83 cents a share.

Sales for the company's fiscal fourth quarter ended May 29 were $113.2 million, well below the $296.1 million book a year ago, but above the $80.6 million analysts were looking for.

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"The launch of Palm webOS and Palm Pre was a major milestone in Palm's transformation," CEO Jon Rubinstein said in a press release. "We have now officially re-entered the race," continued Rubenstein, who took over the top job this month. "We have a new product pipeline that we think will set a standard for the industry."

Palm's hotly anticipated touchscreen phone, the Pre, debuted June 6, after the close of the quarter, and an estimated 150,000 have been sold so far. Palm says it has shipped 351,000 smartphones in the quarter and booked a sell-through of 460,000 smartphones.

Sparse supplies of the Pre have helped limit the number of Pre phones sold, and if that scarcity persists, it could temper the phone's impact on exclusive telco partner

Sprint

(S) - Get Report

.

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) - Get Report

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."