Palm profit drops despite strong smartphone sales

Amid rumors that the company could be acquired, Palm reported Thursday that its third-quarter profit was US$16.5 million, down from $19.8 million for the same quarter last year.

Palm recorded $410.5 million in revenue thanks to strong sales of its Treo smartphone, up from the $388.5 million the company collected for the third quarter of 2006.

Excluding certain charges, the company generated earnings of $0.16 per share for the period ending Feb. 28, falling below last year’s mark of $0.19 but beating estimates from Thomson Financial analysts of $0.12 on a non-GAAP (generally approved accounting principles) basis. Palm’s revenue also beat the Wall Street estimate of $403.6 million.

The company’s news release did not mention persistent industry buzz that the company could be acquired, by either Motorola or Nokia. Company leaders forecast a strong fourth quarter, with revenue expected to fall between $400 million and $410 million thanks to continuing global smartphone sales, said company CEO Ed Colligan in a statement.

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