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Palm Warns of a Steep Sales Shortfall

The struggling smartphone shop cut guidance for the year "well below" the current target.



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warned of a 30% sales shortfall for the most recent quarter.

Citing weak demand for its Pre and Pixi phones, Palm says sales for the fiscal third quarter ended last month will be about $285 million to $310 million. That midpoint of $295 million is 4% below the $310 million the company had originally forecast. But the $295 million estimated revenue level is well below the $424 million figure analysts were looking for.

The company also said it "expects fiscal year 2010 revenues to be well below its previously forecasted range of $1.6 billion to $1.8 billion," according to a press release.

Palm Pixi

The news comes during a particularly rough week for the resurgent smartphone shop. Palm's addition of


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this year as a telco partner has not sparked the uptick in sales that many expected. As this became clear, analysts have issued a succession of stock downgrades for Palm.

Adding to the sense of free fall, Palm has reportedly canceled an appearance at a Goldman Sachs investor show later today.

Verizon's less-than-huge support of the Palm phones

hasn't exactly helped to lift the Pixi-maker's fortunes this year.

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Palm's revitalization story caught hold with investors last year, with the stock more than doubling. But the path to success has been far more challenging this year as larger players with ample resources like


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push Palm out of the market.

Palm shares fell 19% to $6.55 soon after the stock resumed trading in the premarket Thursday. Palm had closed at $8.09 on Wednesday.

--Written by Scott Moritz in New York

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