Palm revenue plunges as competition bites

Palm is to streamline its operations to save cash

Palm has reported revenues of $190m to $200m (£128.5m to £135.2m) for its fiscal second quarter, dramatically short of analyst forecasts of $330.8m (£223.7m).

Gross margin for the period is set at 18 to 19 per cent, minus charges for inventory component purchase commitments ranging from $10m to $15m (£6.76m to £10.1m).

The smartphone maker attributed the underperformance to slowing product sales and generally challenging economic conditions. But widespread opinion is that Palm is struggling to handle the competition posed by rivals such as Apple, Research In Motion / BlackBerry and Samsung.

"We are seeing unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products," said Palm chief executive Ed Colligan.

Other side effects of the company's current struggle will include job cuts in the US, according to Colligan, as well as a consolidation of Palm's European operations and a shifting of Asia-Pacific sales, marketing and administrative operations to its US base.

With the rationalisation exercise, the company expects to reduce quarterly operating costs by about $20m (£13.5m) over the previous quarter.