Palm still in red despite strong sales of Pre

Struggling handset vendor Palm has reported heavy losses for the quarter ended August 28, 2009, despite claiming strong sales of its flagship Pre device.

On Thursday, the US manufacturer said net loss for the three month period hit $164.m, up from a loss of $41.9m in the same period last year. Revenues reached $68m, down from $366.8m in 2008.

However, the company said that taking into account the strong performance of its new portfolio of devices based on the webOS platform, including the Pre and more recently the Pixi, adjusted net loss for the quarter was only $13.6m.

Jon Rubinstein, chairman and chief executive officer of Palm, said the company’s non-standard results better reflected the scale of the launch of the Pre with Sprint at the beginning of the quarter and the subsequent launch of Pre with Bell Mobility in Canada. The claim wasn’t enough to rally shareholders however, with Palm’s stock falling 1.5 per cent during trading on Thursday.

Stealing a trick from Apple’s financial department, Palm also announced that the revenues derived from webOS products are to be deferred and recognised over the product’s estimated economic life, set at 24 months, according to the firm.

The company shipped a total of 823,000 handsets during the quarter, representing a 134 per cent increase from the previous quarter and a year on year decrease of 30 per cent. Sell through (the number of phones that ended up in peoples’ hands) for the quarter was 810,000 units, down 21 per cent year on year.

Touted as a serious competitor to the iPhone and Nokia’s flagship N97, the Pre packs a slide out keyboard and touch screen interface and is available with wifi and GPS. It boasts 8GB of storage and a 3 megapixel camera and probably a handset first in the shape of an inductive charging unit.

The device is also the first Palm gadget to run the company’s flagship webOS platform. Jumping on the cloud computing bandwagon, webOS allows consumers to pull their contact, calendars and personal information down from the internet on any device. A key feature of the alm platform is synchronisation of information between multiple services, so if the same contact is listed in the user’s phonebook and on their social networking sites, both contact details are pulled into the same interface. Likewise with multiple conversation platforms such as text message and email, as well as calendars.

In June, former Apple heavyweight Jon Rubinstein replaced Ed Colligan as chairman and CEO of Palm after 16 years at the helm. Rubinstein was instrumental in turning Apple’s fortunes around in the late 90s, and was also the visionary behind the original iPod, which Apple is now using as a platform to carve out a niche in the mobile space. WebOS is understood to be his baby, but it remains to be seen whether he can do for Palm what he did for Apple.