Palm Sales Soar Helped by RIM’s Legal Woes

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Palm Inc. on Thursday reported earnings that beat analysts’ forecasts as it sold more Treo cell phones and introduced a new device based on Microsoft Corp.’s Windows operating system. Palm, based in Sunnyvale, California, said it boosted its share of the U.S. smartphone market to 30 percent from 22 percent a year earlier. Analysts have said Palm benefited from patent litigation that threatened to shut down the e-mail service of popular BlackBerry devices made by Canadian competitor Research in Motion Ltd.

Research in Motion earlier this month settled the four-year dispute with patent-holding company NTP Inc.

Palm’s net income climbed to $29.9 million, or 28 cents per share, for the fiscal third quarter ended March 3, from $4.4 million, or 4 cents a share, in the year-earlier quarter.


Revenue rose 36 percent to $388.5 million from $285.3 million a year earlier.

Profit excluding certain items was 19 cents per share. Analysts, on average, had expected earnings of 17 cents per share on revenue of $377 million.

Palm said net earnings in the latest quarter included a partial reversal of a deferred tax asset valuation allowance of about $13 million.

For the fiscal fourth quarter ending June 2, Palm forecast revenue of $400 million to $405 million and adjusted earnings per share of 22 cents to 23 cents. Analysts, on average, have forecast revenue of $395.7 million and earnings per share before items of 21 cents.

Palm said it shipped 564,000 Treo smartphones in the third quarter, and phones sold through cell phone carriers and other distributors doubled to 569,000.