Palm shares drop on forecast

Palm Inc., the maker of the Treo e-mail phone, forecast a wider loss than analysts had estimated after customers defected to the BlackBerry and the iPhone. Its shares plunged 11% in late trading.

The third-quarter loss will be 14 cents to 16 cents a share, excluding costs such as stock compensation, Palm said Tuesday. Analysts on average had projected a loss of 5 cents, according to a Bloomberg survey. A year earlier, Palm had a profit of $11.8 million, or 11 cents.

Sunnyvale, Calif.-based Palm said this month that its failure to get a new Treo model certified for delivery in the second quarter contributed to its missing forecasts.

“This is horrible,” said Pablo Perez-Fernandez, an analyst with Global Crown Capital in San Francisco. The company’s product design “is just too old to compete.”

Sales this quarter will probably drop to $310 million to $320 million, the second straight decline, the company said.

The forecast missed the $357.6-million estimate of analysts. Sales were $410.5 million a year earlier.

Palm shares fell 64 cents to $5.29 in extended trading after the announcement. The shares, which have lost more than half their value this year, gained 28 cents to $5.93 in regular trading.