Palm Lowers Revenue Outlook

Palm blames weak corporate demand for its high-end Tungsten line of handheld computers.

Palm Inc. on Monday warned that its third-quarter fiscal 2003 results will be lower than expected because of weak demand for its high-end Tungsten line of handheld computers.

Revenues now are expected to be between $205 million and $210 million, versus the $230 million to $250 million that the Milpitas, Calif., company predicted in December.

The company added that it will take charges of up to $2.7 million in the settlement of two legal matters, but declined to elaborate on these matters.

Officials attributed the weaker results to weak demand from the corporate market in the United States, which is the primary target for Palms Tungsten line of handhelds. Demand increased slightly when Palm lowered the price of the Tungsten T device by 20 percent in February, but that was not enough to meet the previously-expected demand, officials said.

"Economic uncertainty weighed more heavily than we originally anticipated on both the consumer and enterprise segments of the handheld industry," said Eric Benhamou, Palms chairman and chief executive officer, in a statement. "We continue to take aggressive actions to return to sustained profitability, and we remain committed to completing the transformation of Palm into two successful leadership companies in the handheld space."

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