Palm will introduce new Windows Mobile-based smartphones in the ’...

have been delayed, as Palm’s Q4 revenue slipped to $296.1 million from $401.2 million due to a slowdown in sales of existing models, Chief Financial Officer Andrew Brown said. Analysts had forecast Q4 revenue of $301 million. “We clearly would have liked to” have shipped the new Treos sooner, but “sometimes these just take longer than you had hoped,” CEO Edward Colligan said. There will be a “couple of new products” in the market “shortly,” Colligan said. The new models will “deliver major advancements” in smartphones and will be positioned at the high-end with features like built-in 3G, WiFi and GPS, Colligan said. “We strongly believe that our combined Palm and Microsoft solution is the best all-around offering for an enterprise customer,” Colligan said. Palm also maintained that it’s on track to deliver the new Linux-based OS -- the first refresh of the Palm OS in 10 years -- by Q4 with products available in early 2009. Palm had hoped to have a Linux-based smartphone by year-end (CED Oct 10 p10). The delivery of the new Windows-based smartphones coupled with the arrival of a new platform is expected to bolster gross margins, which fell to 25.3 percent in Q4, Brown said. Palm’s gross margin suffered from increased sales of the $199 Centro, which accounted for a large number of the 968,000 smartphones the company sold through in Q4. Centro gross margins were “much lower” than expected, but total margins will see “gradual improvement throughout the fiscal year” with the arrival of new Windows product, Brown said. The Centro was introduced with Sprint in October at $99 after a $100 mail-in rebate (CED Sept 28 p2). That was a sharp departure from the Treo 755p Palm launched at $399 at the same carrier in May 2007. The Centro is being sold through AT&T, Sprint and Verizon, the latter having added the product on June 12. The Centro also has been launched in Australia, Canada (Rogers Communications), Mexico, Spain and the U.K. Centro suffered from early “supply constraints,” but “we've caught up at this point,” Brown said. For the year, Palm’s revenue hit $1.32 billion on a 19 percent rise in smartphone sales to 3.2 million units. Sales of smartphones accounted for 85 percent of Palm’s fiscal 2008 revenue, up from 80 percent a year ago. The smartphones’ Q4 average selling price was $288. As smartphones become a larger part of Palm’s business, its handheld PC segment is declining. Palm’s Q4 handheld revenue dropped 46 percent to $30.6 million on sales of 156,000 units. Palm swung to a $43.4 million Q4 net loss from a $15.3 million profit a year earlier as it took a $1.2 million restructuring charge. It also recorded a $6.6 million impairment charge for non- current auction rate securities.