Palm reports dip in profit due to competition, slow sales

Palm's profit for its fiscal first quarter slipped as it accounted for stock option expenses for the first time and grappled with slow sales growth amid tougher competition, an Associated Press report said.

The Associated Press report said for the three months ended September 1, Palm said it earned $16.5 million, compared to $18.2 million a year ago.

Excluding $6.7 million in stock-based compensation and other one-time items, Palm said it would have earned $21.5 million, the report said.

In the year-ago period, Palm's adjusted net income was $13.7 million.

Revenue was $355.8 million, up 4% from $342.2 million in the year-ago period.

Analysts polled by Thomson Financial were expecting, on average, adjusted earnings of 18 cents on revenue of $354.4 million, the report said.

Earlier this month, the handheld communications company had warned that sales would land between $345 million and $356 million, falling short of previous expectations by about $30 million due to slow Treo sales.

Palm is facing increasing competition in the smart phone market amid new and lower-priced offerings from its longtime rival Research in Motion, maker of BlackBerry devices, as well as Motorola and Nokia, the report further said.