Palm sales slump in third quarter as its new phones struggle for attention

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Palm’s sales slump as its new phones struggle

NEW YORK — Palm Inc. on Thursday reported sales figures that showed it’s having a difficult time getting consumers to pay attention to its phones in a market dominated by iPhones and BlackBerrys.

The company shipped 960,000 smart phones to stores and distributors in the quarter that ended Feb. 26, 23 percent more than in the previous quarter. However, the number of phones that were actually bought by consumers was 408,000, down 29 percent from the previous quarter.

By comparison, Apple sold 8.7 million iPhones in its most recent quarter.

“Our recent underperformance has been very disappointing, but the potential for Palm remains strong,” Palm CEO Jon Rubinstein said in a statement.

Palm reported a loss of $22 million, or 13 cents per share, for the quarter, its fiscal third. But that was mitigated by an accounting effect brought about by the recent drop in Palm’s stock price. Excluding that effect, the loss was $102.8 million, or 61 cents per share.

In the same period a year ago Palm lost $98 million, or 89 cents per share.

Revenue was $350 million. The result was above Palm’s own forecast, issued less than a month ago, for $285 million to $310 million.

Palm shares closed Thursday at $5.65, up 28 cents. After the release of the results, the shares were up another 5 cents. The shares have traded as high as $18.09 in the past year.

Palm was a pioneer in the smart phone business, but lagged behind as BlackBerry maker Research in Motion Ltd. gobbled up the corporate market and Apple Inc.’s iPhone charmed consumers. More recently, Google Inc.’s Android software for smart phones has gained traction at Palm’s expense.

Palm revamped its portfolio last year by introducing a new phone operating system, webOS. It’s the basis for a new line of phones, led by the Pre, that have won critical praise but haven’t turned the company’s fortunes around.

Analysts have suggested that Palm is now too small of a player in the phone market and could be acquired. Potential buyers might eye its software and patents. But they also could be dissuaded by the time it would take to get webOS running on their phones.