Competition from MS smacks Palm results

Hand-held vendor reports first-quarter loss

Hand-held computer vendor Palm has reported a first-quarter loss as it continues to battle against heavy competition from Microsoft-powered devices.

For the three months ended 30 August, (Q1 2003), Palm posted turnover of $172.3m, down 20 per cent on the $214m for the same quarter the previous year. Total net loss for Q1 was $258.7m compared with a net loss of $32.4m in Q1 2002. The latest figure took separation costs and restructuring charges into account.

However, Eric Benhamou, Palm's chief executive, remained positive. "Our Q1 results continue to demonstrate the high standards of operational discipline maintained by Palm employees and demanded by the current market," he said.

"We are pleased to have completed our key 2002 enterprise strategy objective and its various underlying milestones during the quarter."

Palm also announced the launch of two new products tailored to the needs of professional and casual users.

The first product, from the Tungsten line, is a mobile system for corporate and IT managers which allows users to access the internet wirelessly.

The other product from the Zire range, is aimed at consumer personal digital assistant (PDA) users.

Paul Coster, an analyst at JP Morgan, said Palm's perseverance has helped it continue to be the top PDA vendor. "Some observers in the sector have been picking Microsoft-based PDAs to overtake Palm in the hand-held market, yet Palm has persevered and maintained market dominance," he said.

"If Palm can really do a good job with Palm OS 5, there is no reason that Microsoft should overtake us."