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Palm's losses decline for second quarter

It's another losing quarter for the smartphone maker, but the company is showing some progress.

Though still losing money, Palm might have something in the way of positive momentum going.

The smartphone maker on Thursday reported second-quarter fiscal 2010 revenue of $78.1 million, but a loss of $85.4 million, or 54 cents per share. It's a drastic improvement from the $508.6 million loss, or $4.64 per share, a year ago, and the $164.5 million, or $1.17 per share, loss in the previous quarter.

Wall Street analysts were anticipating a loss of 32 cents per share.

Palm says it shipped 783,000 smartphones during the quarter, a 5 percent decrease from last quarter, but a bump of 41 percent over a year ago.

Chairman and CEO Jon Rubinstein tried to put a positive spin on the results.

Palm Chairman and CEO Jon Rubinstein holds up the Pre at CES 2009.
Palm Chairman and CEO Jon Rubinstein holds up the Pre at CES 2009. Corinne Schulze/CNET

"Were pursuing our strategic objectives in a crowded market," he said during a call with investors. "Despite proliferation of products, we're still at the very beginning of a long race."

Rubinstein also referenced the recently released Pixi, the second phone after the Pre to run Palm's new WebOS operating system, which it started selling to customers on November 15. Palm has struggled in the last few years in comparison to companies like Apple and Research In Motion, but sees devices like the Pre and Pixi, coupled with integrated software as the key to its future success.

Though he didn't reference any competitors by name, Rubinstein was asked by an investor about his company's response to a potential Google phone.

"As I've always said this is going to be a very competitive business," he said. "From our perspective, it's one more competitor in the marketplace, but we haven't actually seen anything announced yet."

Rubinstein said he's pleased with the Palm community's response to WebOS. Palm released the 1.31 update to the OS in mid-November and it was installed by 70 percent of users within a week, he said.

Another way Palm has had trouble competing with Apple's iPhone is with the WebOS App Catalog. Since its inception, only preapproved developer partners have been allowed to create and submit applications. There are 800 apps available, a far cry from the 100,000 in the iPhone App Store, but it's an increase of 10 times the number of apps in Palm's App Catalog in the last quarter, according to Rubinstein.

He says there will be much more to come at CES in January, when Palm will introduce its full development program for anyone who wants to participate. Leading up to that, Palm on Thursday morning released Project Ares, Palm's new browser-based mobile development environment.

This post was updated at 2:46 p.m. PST with information from the earnings call.