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Palm revenue blip causes worries

Needs those new models, sharpish

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Palm says its most recent quarter's earnings will come in lower than it hoped. The company said revenue for 1H 2007, which it previously stated would come in between $380m and $385m, will fall short, between $354m and $364m.

The smartphone business is booming, but Palm is trending in the wrong direction - Q4 2006, which ended in May 31, saw Palm gross revenues of $403.1m.

CEO Ed Colligan said two new models would "address the market dynamics responsible" - with one budget model and one global model in the offing.

The latter is almost with us - Palm will unveil its GSM-based model with Vodafone at an event next week.

Critics (and short-sellers) say the company hasn't done enough to remain competitive. RIM has found interest in its latest models, and Motorola's Q and Nokia's E61 have been winning rave reviews in the US. Palm has only made minor tweaks to its Windows Mobile-based and PalmOS-based smartphones, the 700w and 700p respectively, and it has been unable to deliver a 3G, WLAN model on PalmOS at all.

But longer term, the problem isn't one single competitor. As Palm becomes more reliant on Windows, it has to spend more to distinguish itself from no-name carrier-branded clones. There are a lot of similar Windows products out there, all alike, and all forgettable.

Meanwhile the company has yet to reveal the plans for its its home-grown platform. Palm is up to something - hiring Linux developers and client/server developers - but it won't say what. ®

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