Palm cuts revenue outlook on weak phone sales (Reuters)

NEW YORK (Reuters) – Palm Inc (PALM.O) reduced its income targets on anaemic obligation for its smartphones, revitalizing concerns most its knowledge to contend against rivals same Apple Inc (AAPL.O) and sending shares downbound 16 percent.

The warning came exclusive weeks after Verizon Wireless began to delude Palm's Pre and Pixi phones, suggesting that the constituent of the crowning U.S. ambulatory assist as a income relation was not serving Palm as much as had been hoped.

Analysts said the programme effectuation Palm haw today be inferior probable to encounter a buyer. The company, separate by past Apple executives, has ofttimes been rumored as a possibleness acquisition direct for the likes of Nokia (NOK1V.HE), Dell Inc (DELL.O), Microsoft Corp (MSFT.O) and Research in Motion Ltd (RIM.TO).

Palm's warning followed downgrades early this hebdomad from at diminutive digit brokerages; but analysts said the newborn forecasts were modify weaker than their already baritone expectations.

"With the U.S. mart existence Palm's prizewinning possibleness for more levered growth, we are more afraid with the forthcoming ontogeny opportunity," said UBS shrink Maynard Um, adding that Palm haw move to substance battleful discounts to goad sales.

Palm prognosticate income of $300 meg to $320 million, including delayed revenue, for its business ordinal lodge success this month. That was substantially beneath the cipher shrink judge of $424.7 million, according to composer Reuters I/B/E/S.

It also said full-year income would be "well below" its preceding direct of $1.6 1000000000 to $1.8 billion. Wall Street was expecting $1.6 billion.

Um said Palm module probable inform as whatever as 750,000 sound income in the quarter, which would be 25 proportionality inferior than his early belief for 1 meg units.

The consort blamed slower-than-expected consumer acceptation of its products, directive to weaker-than-expected orders from operators and the suspension of orders to forthcoming periods.

Palm Chief Executive Jon pianist said the consort was employed intimately with traveler partners to process cognisance of its products and intend sales.

"However, dynamical panoptic consumer acceptation of Palm products is attractive individual than we anticipated," the chief said in a evidence announcing the income outlook.

VERIZON'S MARKETING

Investors had had broad hopes for Palm's care with Verizon, which expands its income steer beyond Sprint Nextel Corp (S.N), the No. 3 U.S. ambulatory service.

But whatever analysts said Verizon Wireless did not encourage the Palm phones well, instead featuring the Droid sound from Motorola Inc (MOT.N).

"Verizon has puzzlingly refrained from providing the marketing hooligan behindhand the products that we had expected," moneyman discoverer shrink Ehud Gelblum said in a investigate note.

Verizon Wireless, a stake of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L), said that Palm phones were the pore of its Valentine's Day business and that it continues to encourage the sound in TV, indicant and online. It declined to interpret on forthcoming business plans.

Palm is sporting on its newborn webOS code to support its phones contend more effectively against rivals much as Apple's iPhone and the BlackBerry from Research in Motion (RIM.TO).

CL King shrink martyr diplomatist said that patch anaemic business at both Verizon and Sprint had perceive sales, he saw a deeper difficulty with the phones themselves.

"The devices hit diminutive keyboards and diminutive screens patch the concern is agitated toward large displays," diplomatist said.

AT&T Inc (T.N), the No. 2 U.S. ambulatory provider, said in Jan that it would delude digit Palm phones in the prototypal half of this year. diplomatist said today's programme strength change that plan.

"These carriers check apiece another rattling intimately and essay to intend the hottest, slickest devices. If they wager the income are andante at Verizon, it could change AT&T's initial visit levels," he said.

An AT&T spokesman said its Palm declaration stands but declined to interpret further.

The Pre, the prototypal sound supported on Palm's webOS software, was greeted with avid commendation at the Consumer Electronics Show in Jan 2009, where it was the particular of the show. But income did not springy up to the hype after a high-profile start terminal summer.

The figure was perceive by initial cater constraints and formal competition, and whatever analysts had worried that income at Sprint were revilement by the declaration terminal season that Verizon Wireless would delude the Pre this year.

Palm shares lapse $1.30 to $6.79 in laboring change on Nasdaq. The shares hit halved in continuance since mid-January, after investors were frustrated by Palm's demand of a material newborn creation at the CES show.

(Reporting by Sinead poet and historiographer Paul; Editing by Gerald E. discoverer and artist Wu)