Palm touts Centro sales, but posts profit loss

Palm Inc.’s fiscal third quarter yielded revenue of $312 million but a loss in net income of $31.5 million, despite a 13% rise in handset unit sales.
Revenue was down 24% from the year-ago quarter and net income dropped even more sharply — in the year-ago quarter net income was $11.8 million. Restructuring charges weighed heavily on profits.
The announcement Thursday afternoon led to a nearly 5% drop in Palm’s shares in after-hours trading.
The good news was that Palm’s $100 Centro smartphone is selling briskly and 70% of purchasers were trading up from feature phones. The Centro premiered at Sprint Nextel Corp. and, more recently, lauched at AT&T Mobility. The bad news is that the Centro, and its slim margins, may be cutting into the sales of more expensive Treos, which carry healthier margins for the struggling smartphone vendor.
Palm is treading water financially while it attempts to develop a new smartphone platform that will replace the aging Treo line, whose design and operating system has been overrun in the enterprise market by Research In Motion Ltd. and, possibly, in the prosumer market by Apple Inc.’s iPhone.