Palm Inc. posted a smaller-than-expected loss on sales of its new Pre smartphone but offered a tepid second-quarter sales forecast, and its shares fell.
The maker of the Pre smartphone, whose stock quadrupled this year as investors bet on the popularity of the mobile device, forecast second-quarter revenue of $240-million (U.S.) to $270-million, compared with an average forecast for non-GAAP revenue of just over $345-million.
Separately, Palm said it plans to sell 16 million shares of common stock. Elevation Partners, which already owns a sizable stake in Palm, expects to buy $35-million worth of stock in the offering.
Palm has staked its future on devices based on its new webOS platform, such as the Pre smartphone and its recently announced Pixi device. It launched the Pre - which competes with Apple Inc. 's iPhone and Research In Motion Ltd. 's BlackBerry - in June to strong reviews.
Palm said it shipped 823,000 smartphones in the fiscal first quarter, up 134 per cent from the previous quarter.
"We're making significant progress with Palm's transformation," chief executive officer Jon Rubinstein said in a statement.
Palm was an early pioneer in handheld devices but has been surpassed by rivals such as Apple and RIM. Competition in the smartphone category is growing fiercer by the day, with competitors entering the market and more handset companies developing products based on Google Inc. 's Android platform.
On Thursday, Palm reported a net loss applicable to common stockholders of $164.5-million, or $1.17 a share, in its fiscal first quarter ended Aug. 31, against a year-ago loss of $41.9-million, or 39 cents a share.
Excluding items, the company posted a loss of 10 cents a share, beating analysts' average estimate of 25 cents according to Reuters Estimates.
Revenue on a non-GAAP basis was $360.7-million against Wall Street's average forecast of $289.1-million.
The Sunnyvale, Calif.-based company's stock fell to $14.30 a share from its close of $14.44 on Nasdaq. It had risen to $15.30 in the minutes after the closing bell.