Palm Inc, the maker of Treo cell phones, forecast lower-than-expected revenue amid tough competition from Research in Motion Ltd's Blackberry and Apple Inc's iPhone, sending its shares tumbling 12 percent on Tuesday.
The company, whose smartphones allow users to make calls, take pictures, and access e-mail and the Web, also said it would stop giving specific financial forecasts and limit its outlook to general business guidance and comments on industry trends.
Palm, based in Sunnyvale, California, earlier this month announced a product delay and warned that it would make a loss for its fiscal second quarter ended November 30.
It said on Tuesday that the quarter's net loss was $9.63 million, or 9 cents per share, compared with net income of $12.8 million, or 12 cents per share, a year earlier.
Revenue fell 11 percent to $349.6 million.
The second quarter did not meet our expectations, Palm Chief Executive Ed Colligan said on a conference call with analysts. We did not execute as well as we need to.
Colligan said the revenue shortfall was mainly because Palm had to delay shipping its latest-generation Treo 755 model after the device failed to meet some requirements for certification by carriers.
The phone has since been certified for delivery and is being shipped to Verizon Wireless, he said.
The product delay had led to concerns that Palm could miss out on the critical year-end holiday shopping season for a second year in a row because of execution-related problems.
The Sunnyvale, California-based company forecast current-quarter revenue of $310 million to $320 million, less than analysts' average estimate of $356 million according to Reuters Estimates.
Palm also forecast a loss before certain items of 14 cents to 16 cents per share for the quarter, worse than the average Wall Street estimate of a 4 cent loss. It said its net loss would range from 31 cents to 33 cents per share.
The projected fiscal third-quarter net loss includes $16 million to $18 million in restructuring charges, including severance and facility closure costs as Palm cuts an unspecified number of jobs and reduces other costs.
Palm also faces tougher competition in the United States from the Blackberry and iPhone.
It said it had lower profit margins in the last quarter due to increased warranty expenses for older models and higher-than-expected shipments of the Centro, a lower-end phone available for about $100 with a wireless subscription.
The company forecast a third-quarter gross profit margin ranging from 30.3 percent to 30.8 percent.
Palm shares dropped to $5.22 in extended trading following the earnings report, after closing up 5 percent at $5.93 on Nasdaq earlier in the day.
(Additional reporting by Franklin Paul in New York, editing by Leslie Gevirtz/Andre Grenon/Richard Chang)