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Palm reported revenue of $355.8m for the quarter ending 1 September, with a slim net income of $16.5m. Measured on a non-GAAP basis, the profit was $21.5m.

Revenue rose four per cent from a year ago, but was down 12 per cent sequentially. Palm had earlier warned that revenue would be lower than it originally expected, in the $380m to $385m range.

Palm sold 569,000 Treos and 490,000 PDAs in the quarter, generating $269m and $87m worth of revenue respectively.

CEO Ed Colligan blamed the sales shortfall on greater competition in the retail channel. The US business has been a two horse race until this summer, with RIM and Palm taking the lion's share; Motorola's Q and Nokia's E62 (a rebadged E61 without the Wi-Fi) have changed that.

Colligan said Palm would be introducing a low cost model, priced below $299, for "the very new future". A device codenamed Nitro appeared on Cingular documents earlier this year, Engadget reported.

Adding to the belief that Palm may have released its last ever PDA, Colligan dampened expectations for new handheld models for the Christmas season.

Palm said it expects revenue of between $430m and $450m for Q2 2006.

In an effort to bolster its share price, the company also announced that it's spending almost half of its cash hoard buying back stock. Palm will spend $250m on the buyback program. It ended Q4 2005 with $527.9m in cash. ®

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