Detailed Update of Palm's (PALM) Weak Q3 Revenue Guidance

March 3, 2009 4:42 PM EST

Palm, Inc. (Nasdaq: PALM) expects to report revenues for Q3 in the range of $85 million to $90 million. (Consensus is $158 million)

The revenue declines vs. the company's Q2(09) and Q3 of fiscal year 2008 are the result of reduced demand for Palm's maturing legacy smartphone products, the challenging economic environment and later-than-expected shipments of the Treo(TM) Pro in the United States. The company expects declining revenues and continued margin pressure from its legacy product lines in the fiscal fourth quarter.

"The much-anticipated launch of the Palm(R) Pre(TM) remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," said Palm President and Chief Executive Officer Ed Colligan.

Palm stated that cash used in operations for the quarter is expected to be between $95 million and $100 million. The company's cash, cash equivalents and short-term investments balance is expected to be between $215 million and $220 million at the end of the third quarter.

The company is currently evaluating options, including the exercise of its right to direct the remarketing of a portion of the common shares underlying the Series C preferred stock and warrant units owned by Elevation Partners. Palm is entitled to retain any net profits realized from such remarketing.

Palm, Inc. (Palm) is a provider of mobile products. It offers Treo and Centro smartphones, handheld computers and accessories through a network of wireless carriers, as well as retail and business outlets worldwide.[SM]

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• Elevation Partners

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