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Palm's April sales slump

Things appear to be going from bad to worse for the leader in handhelds, as data shows the company's sales at U.S. stores were down about 20 percent from those in January.

SAN FRANCISCO--Things appear to be going from bad to worse for Palm, the leader in the handheld market.

Palm Chief Financial Officer Judy Bruner said Wednesday that the latest numbers from PC Data show that the company's sales at U.S. stores in April were down about 20 percent from those in January. By comparison, retail sales in March were roughly flat with January, which is typically one of the slowest months for handheld sales after the holiday buying season.

"It's been fairly weak and getting a bit weaker from February to April," Bruner said, speaking to investors during a breakout session at the J.P. Morgan H&Q Technology Conference here.

Bruner did not give any new financial guidance and refused to say whether things look worse now then when the company gave its last forecast.

Predicting when things will improve is also proving difficult, Bruner said.

"Our visibility as to when sales will pick up is fairly limited," Bruner said.

Bruner did say that Palm expects to take a one-time charge, likely this quarter, to write off some of the up to $300 million in inventory the company has said could pile up by quarter's end. Such a write-off would probably include both components and finished handhelds, she said.

On a positive note, Bruner said both the m500 and the color m505 have started shipping, although full-volume shipments of the latter may not come until the end of this quarter or early next quarter.

The m500 is "shipping in more volume than the m505, which just started shipping," Bruner said.

She said the company is on track to ship a successor to the Palm VII wireless handheld by year's end, with that product being made available first with service from Cingular Wireless.

Bruner said Palm is also working on a device with built-in GSM service for the European market, although she would not give further details or say when the product would be made available. GSM, or Global System for Mobile Communications, is one of the leading digital cellular systems.