Palm sells record number of Treos in Q3

Motorola named as a possible buyer of Palm

Palm said Thursday it hit a company record for its smart phone sales in its third quarter, the reverse of Wednesday's negative news from handset maker Motorola.

Motorola had been named by analysts and some unnamed sources in news reports as a possible buyer of Palm. Some news reports said Motorola's bad showing in handset sales and lowered revenue projections kept it from moving forward with the purchase. Neither company has commented publicly on such a deal. During a conference call on the earnings, CEO Ed Colligan said the company "is just not going to comment on rumours or speculation."

Palm's record was for sales of 738,000 smart phone units sold in the third quarter, an increase of 30 percent over the same quarter last year, and up 20 percent from the second quarter, according to a statement released late Thursday.

Revenue for the third quarter that ended March 2 was US$410 million, an increase of 5.6 percent over the US$388 million revenue for the same quarter a year earlier. Net income was US$11.8 million or 11 cents per share.

"We delivered solid results in the third fiscal quarter and continue to expand our global market presence," Colligan said. "Treo smart phone sell-through and revenue reached record levels and Palm products were available to smart phone customers through seven of the top 10 carriers in the world."

All four Treo models, the 700w, 700p, 750 and 680, accounted for US$354 million in sales for the quarter, Colligan said in a conference call. Treo buyers pay "premium prices," Colligan said. "They still care about quality and about user experience and trust the Palm brand. We expect an even more competitive and profitable Palm to emerge."

Palm also said revenue for the fourth quarter will be in the range of US$400 million to US$410 million, with earnings per share of between 10 cents and 13 cents.

In a separate statement, Palm said it was pleased with U.S. District Court Judge James Spencer's decision Thursday to grant a stay of proceedings in the patent infringement litigation brought against Palm by NTP. Spencer also acted to strike one portion of NTP's complaint alleging misbehaviour at the U.S. Patent and Trademark Office.

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