PalmOne reports $4.1 million loss

The company, a merger of Palm's handheld business and former rival Handspring, takes a hit in its second quarter as it adjusts to discontinued operations.

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Mobile device maker PalmOne, carved out from the merger of the hardware spinoff of Palm and former rival Handspring, reported a second-quarter net loss of $4.1 million on Thursday.

Income from continuing operations was $2.6 million, or 7 cents per share, in the second quarter of fiscal 2004, ended Nov. 30. That compares with $9.5 million, or 33 cents per share, a year ago.

But including discontinued operations, the Milpitas, Calif.-based company made a net loss for the quarter of $4.1 million, or 11 cents per share. That compares with net income in the year-ago quarter of $3.5 million, or 12 cents per share, on the same basis.

Second-quarter revenue rose marginally year over year, from $257.9 million to $271.2 million. The company said it sold 1.4 million handheld computing devices during the quarter.

"New business and consumer solutions helped us increase revenue, gain market share, improve inventory turns and achieve positive operating income," PalmOne CEO Todd Bradley said in a statement.

However, handheld sales have not been doing well, despite new products hitting the market. Analysts predicted in October that the slump is likely to continue through the holiday season.

In October, shareholders approved a plan to spin off Palm's operating system business as a company named PalmSource. They also supported the simultaneous acquisition of competitor Handspring, which was merged with Palm's hardware operations to become PalmOne.

PalmOne's results have two months of PalmSource results included in discontinued operations and one month of Handspring results included in income from continuing operations.

Shares of PalmOne were down $2.88, or 21 percent, to $10.97 in midday trading on the Nasdaq.