Palm's fiscal first-quarter earnings dropped 7% as higher costs and stronger competition undercut stronger sales of its hand-held computing products. Meanwhile Palm CEO Ed Colligan gave a lower-than expected guidance for the second quarter. As a result, Palm shares dropped over 17 percent today in early trading.

Leading analysts to question whether the Treo — Palm's high-flying smartphone — is strong enough to carry the company while it moves focus away from digital organizers... Mr. Colligan said that sales of Treo smartphones —the hybrid device that acts as a cell phone and digital organizer — rose 163 per cent while sales for personal digital assistants fell 22 per cent. He added that Palm could see a deferred-tax asset valuation allowance in the second quarter, which may lead to earnings of between 60 cents and 66 cents per share. Without it, the company may report earnings per share in the range of 38 cents to 43 cents, far lower than analysts' forecast of 66 cents.

Related: PalmSource, recently acquired by Japan's Access, had a disappointing quarter as well. Revenues slid 13 percent and Net losses widened to nearly $2 million. More (http://biz.yahoo.com/prnews/050922/sfth014.html?.v=22).

[via AP Wire (http://www.theglobeandmail.com/servlet/story/RTGAM.20050923.wpalm0923/BNStory/Business/)]

I do love Palm handhelds, but current management is not doing they job properly. Lack of marketing (http://www.mobileread.com/forums/showthread.php?t=4956), questionable product quality (http://www.mobileread.com/forums/showthread.php?threadid=5047) and incorrect product placement lead to more people making the switch to alternatives.