Forbes reports Palm noted PDAs have lower-than-company-average gross margins than smartphones. PDAs have average selling prices that are half those of the smartphones but the company says PDAs would be profitable on a standalone basis.
However, Kalla said in a research report that Palm is "focused on smoothing out volatility on top line by pacing new product introductions that could restrain upside projections."
"One key issue with Palm is the acceleration of new products, and difficulty in predicting product transitions," Kalla said. "However, the company thinks it has a good view of orders for six months, especially smartphones since they are customized to customer specifications."
About 62 percent of Palm's revenue during the fiscal first quarter ended August were smartphones and this is expected to increase because Palm is planning to launch multiple new products.
The replacement for the Treo 650, also with an EVDO radio, will ship in fiscal fourth quarter ending May to Verizon Wireless and also probably to Sprint Nextel (nyse: S - news - people ), Kalla said. A version with a UMTS radio could ship to Cingular Wireless, likely closer to the end of the year. "We had previously thought the product would ship in the third quarter, but believe Palm delayed it so it can concentrate on the Windows Treo release." Cingular is a joint venture of SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS - news - people ).
Later in fiscal 2006 the company will introduce new mid-market Treo smartphones with a price of about $200. More details over here.