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PalmOne saw its sales grow 37.8 per cent sequentially and 29 per cent year on year during the second quarter of its 2005 fiscal year, the smart phone and PDA maker reported yesterday.

Q2's revenues totalled $376.2m, well up on the $273.1m it recorded in Q1 and the $271.1m it received in the year-ago quarter.

Net income was similarly boosted, reaching $24.7m (48 cents a share). A year ago, it reported a net income of $2.6m (seven cents a share) - last quarter, the figure was $19.6m (38 cents a share).

Gross margin for the quarter rose to 29.1 per cent from 27.1 per cent in the comparable quarter a year-ago period, but was down on Q2's 33.3 per cent margin. Operating margin was 8.1 per cent, also down on the previous quarter, which yielded 8.5 per cent.

The quarter, which ended on 26 November, just before the start of the Holiday buying period, saw the arrival of both the Treo 650 and the Tungsten T5, both contributing to the 1.6m handhelds the company shipped during Q2, up from Q1's 981,000 and Q2 2004's total, 1.4m.

With sequential revenue growth (37.8 per cent) more than double sequential unit growth (14.3 per cent), it's clear PalmOne's sales are shifting toward its higher-price products - its declining margins would suggest the Treo line in particular. ®

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