Palm Pre Anticipation Keeps Palm Positive as Revenues Dip

Palm expects third quarter earnings for fiscal year 2009 to dip below those of the second quarter. However, the upcoming release of the eagerly awaited Palm Pre smartphone - which Palm hopes will be its answer to the Apple iPhone and RIM BlackBerry Storm - may bring financial salvation in the end.

Palm announced it is expecting revenues between $85 million and $90 million for the third quarter of fiscal year 2009. Palm plans to detail complete financial results for that quarter - which spans the economically souring period of Dec. 1, 2008 through Feb. 28, 2009 - on March 19.

Palm, however, is anticipating a more flush future, which includes its new Pre smartphone.

In a statement, Palm attributed the financial declines of the third quarter of 2009, which fell below the third quarter of 2008 and the second quarter of 2009, to reduced demand for its older lines of smartphones, the recession in the United States and the delayed shipment of the new Treo Pro in the United States.

Though it's the Palm Pre that has tech lovers impatiently tapping their feet.

"The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," Palm CEO Ed Colligan said in a statement.

"Despite the challenging market environment, the extraordinary response to the Palm Pre and the new Palm webOS reaffirms our confidence in our long-term prospects and our ability to reestablish Palm as the leading innovator in the growing smartphone market," Colligan added.

Excitement surrounding the Palm Pre is reminiscent of that around the Apple iPhone, and appropriately so. It was designed by Jon Rubinstein, who left Apple in 2006 and brought his killer design aesthetic to Palm instead.

Palm also announced that, because it will periodically update software features, free of charge, to customers of its Palm webOS products, which includes the Palm Pre, it will recognize the revenues and cost of revenues associated with those products on a straight-line basis over their estimated 24-month economic life.