The market crushed shares of Palm on Thursday after it admitted that sales of its anticipated new phones were missing expectations, quelling hopes the company could regain ground in the competitive mobile market.

The mobile maker warned that revenue for the quarter ending February would be between $300 million to $320 million, well below average Wall Street estimates of $410 million.

By close, shares dropped nearly 20 percent, or $1.56 to $6.53, gaining only half a percentage point after hours.

The company explained that revenue for the quarter and the full year are coming in much lower due to slower-than-expected consumer adoption of the company's products.

Some industry watchers expected a slow down in sales given a general slow down in mobile handsets sales, but the size of the slowdown caught many by surprise. Long-term macro projections also aren't in the company's favor.

With the US market being Palm's best opportunity for more levered growth, we are more concerned with the future growth opportunity, said Maynard Um of UBS.

Gartner researchers projected that the company's smartphones will have only 1.4 percent  of the smartphone market in 2012

The company -- with is ailing Palm Pilot OS -- had lost significant momentum in the past, but it rebounded on the strength of its Pre platform.

While the firm was able to generate plenty of buzz, it wasn't able to execute effectively, according to Gartner analyst Van Baker.

First they announced so far in advance of actually shipping the product that they diluted the positive buss that they created at the Consumer Electronics Show in January of 2009, Baker writes in an official Gartner weblog.

Launching with Sprint was also a mistake, Baker explains, as they are network in decline.

Palm has tried to address this with the Verizon launch but Palm may have waited too long to do this.

Wall Street is skeptical as to whether the company can rebound from its mired attempt to jump back into the market. Demand is slow for its new phones, and the expected boon from Verizon and Sprint haven't been materializing.

No matter how good the product, we believe that penetrating the channel will continue to be difficult for Palm and will only get tougher as more competitive touc handsets come to market through the year, J.P Morgan analyst Rod Hall told clients.

Palm is also operating in a highly competitive environment, against giants like Apple and Nokia that have much larger brand-recognition and marketing budgets.

Palm may not be able to quickly bounce bank, Hall concluded.