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PalmOne's third-quarter sales dipped sequentially but were up year on year, the PDA maker said yesterday.

For the three months to 25 February, PalmOne received $285.3m in revenue, down on Q2 FY2005's $376.2m but up 18 per cent on the year-ago quarter's $242.5m. The post-Christmas quarter is traditionally a weaker one for the PDA company.

Q3 FY2005 yielded net income of $4.4m (nine cents a share), well up on Q3 FY2004's $9.3m (20 cents a share) loss, but down on the previous quarter's $24.7m (48 cents a share).

The recently completed quarter's non-GAAP net income was $10.6m (21 cents a share), the difference accounted for by "the effects of the amortisation of intangible assets and deferred stock-based compensation" and laying off staff.

Looking ahead, PalmOne said it expects Q4 FY2005 revenue to line in the $320-330m range, making for sequential sales growth of at least 12.2 per cent and year-on-year growth of 19.7-23.5 per cent. During the past quarter it shipped some 938,000-odd devices.

The Treo 650 supply deals signed with Orange in the UK, France and Switzerland, and with Telecom Italia Mobile are all bearing fruit, PalmOne expects half of its revenue to come from smart-phone sales. Gross margins are expected to fall between 29.5 and 30.5 per cent.

With the company now run by former Handspring president Ed Colligan - at least until a replacement for former CEO Todd Bradley is found - it's no surprise that the company should be increasing its focus on the Treo product line. But it's clear demand for pure-play PDAs is declining, so such a shift whether, through careful planning or natural inclination, is to be welcomed.

Still, the company is expected to update its Zire 7x consumer-oriented multimedia PDA family shortly with a new model, the 73, if a hint on an Amazon.com page is anything to go by. Wild speculation on Internet news groups suggests something big is cooking on the Tungsten business PDA front, not to mention a possible Windows Mobile-based Treo.

Whatever products are launched in Q4, if any, expect earnings of 20-27 cents a share, the company said. ®

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PalmOne brings forward Euro Treo 650 debut
PalmOne settles WLAN gaming patent clash
PalmOne chief quits
PalmOne Q2 sales soar
PalmOne offers Treo 650 users a free 128MB card

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