Palm puts on its game face

Palm will try to reassure the computing world that it is still the handheld king, despite some royal stumbles over the past six months.

Palm will try to reassure the computing world that it is still the handheld king, despite some royal stumbles over the past six months.

In what is shaping up to be a big day for the handheld maker, Palm CEO Carl Yankowski will outline the company's strategy for capturing the corporate market during a Tuesday-morning keynote speech at the PC Expo convention, a part of Technology Exchange Week New York. A few hours later, Palm will report its fiscal fourth-quarter earnings.

After twice slashing estimates, the company is now expected to report an operating loss of US$170 million to US$190 million for the quarter, on sales of US$140 million to US$160 million. The company is also expected to say more about job cuts and its efforts to preserve its dwindling cash reserves.

A consensus of analysts expects the company's loss to come in at 19 cents per share excluding one-time charges, according to First Call. However, several analysts have said they are more interested in hearing what Palm will say about its efforts to get back on track than in learning just how bad last quarter's numbers were.

Lehman Brothers analyst Joseph To said he doesn't see Palm's circumstances turning around anytime soon.

"I think it's going to be tough at least for the next quarter," said To, who predicts that Palm will post revenue at the low end of its most recent forecast.

He added that the handheld market has become increasingly crowded. On a recent trip to Best Buy, To said, he saw 15 or 20 different models, about twice the number on shelves a year ago. "There are a ton of products out there," he said.

Meanwhile, Yankowski is expected to use his speech to, among other things, announce a partnership with one of the Big Five accounting and consulting companies, according to a source familiar with the company's plans. The deal is expected to include joint efforts to develop software and services for corporations.

To said he expects Palm to turn to more partnerships to sell to big businesses, after the collapse of the company's deal to buy Extended Systems.

"They want to get in quickly," To said. "The fact this Extended (deal) fell through slows down the process."

Earlier this month, Palm announced it was working with enterprise software company SAP to offer the e-business software through Palm's handheld computers.

Santa Clara, Calif.-based Palm is also trying to counter the perception that it is losing leadership of the handheld market, an issue that came to the forefront last week when market researcher Gartner issued a report predicting that Compaq Computer is likely to take in more money from handhelds than Palm did in the most recent quarter.

Palm last week issued a statement touting the fact that an independent survey showed its handhelds are the top choice of Fortune 1000 companies.

Of the companies that responded, 56 percent have established standards for handheld computers, according to the study by Palm Harbor, Fla.-based Winn Technology Group. Of those with standards, 87 percent include the Palm operating system, 70 percent approve of Palm handhelds, and 57 percent authorize the Palm brand exclusively.

After the close of trading Tuesday, Palm will release its earnings and has promised to give specifics on job cuts that were announced at the beginning of the month. Palm is also expected to have more to say about how it intends to save money. At least one analyst has projected that the company could run out of money as soon as November.

Already, the company has taken the first steps to sell land it had hoped to use for its new headquarters, a move that could free up some of the US$200 million-plus that Palm had tied up in the deal.

Still, Merrill Lynch analyst Melanie Hollands warns that Palm's current financial problems may hamper its ability to prepare for the long term.

"We believe that focus on near-term issues could distract management from bigger-picture challenges," Hollands wrote in a research note Friday, "and this makes Palm (shares) look more risky."