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Nearly a month ago Palm advised that it would report lower-than-expected earnings and revenues due to a delay in shipping its Treo 750 smartphone in the United States. With the company revealing the numbers for its second fiscal quarter, which ended December 1st, yesterday, those estimations have come true.

Palm reported $392.9 million in revenue and 12.8 million in net income (or 12 cents per diluted share), far lower than original earning estimates for the quarter of $430 to $450 million. This is a slide of 95 percent from the same period a year ago, when Palm took advantage of a one-time tax gain to report a net income of $226.3 million (or $2.51 per diluted share).

For its current fiscal quarter, Palm predicts revenues between $400 to $410 million and earnings between 11 to 13 cents, once again lower than analyst expectations.

Palm shares actually gained value in after-hour trading, hitting $13.85, up from a close of $13.70 on Tuesday. A year ago the company's stock was valued at $24.91, however.

In Palm's less-than-stellar earnings report, there is one ray of sunshine: It has shipped 617,000 Treos, an increase of 42 percent from a year ago and 8 percent from its first fiscal quarter. All this without the Treo 750 making its U.S. debut.

"We are pleased to report strong Treo sell-through this quarter, which is one of the most important metrics. More customers throughout the world bought Treo smartphones than ever before," said Palm CEO Ed Colligan.

This might be true, but in an ever more lucrative smartphone market, Palm, once the leader in the U.S., is now facing stiffer competition from the likes of current leader RIM, with its new consumer-friendly, more modern-looking-than-a-Treo, and lower-cost BlackBlackBerry Pearl model, which started shipping in September. Not to mention the slew of Windows Mobile models from other Microsoft licensees (i.e. the T-Mobile Dash, Samsung BlackJack, Cingular 3125 & 8125, Motorola Q, etc.), and Nokia's recent push to expand its presence with devices built on the world-leading Symbian OS and S60 interface.

For example, Cingular is already offering the high-profile (and supposed) BlackBerry/Treo killer E62 model, while a number of additional new Nokia smartphones are also on their way. And Palm has delivered about 400,000 Treos to the 1.1 million BlackBerry wireless handhelds shipped by RIM since September.

In spite of the lag in launching the Treo 750 in the U.S., the smartphone - released by Vodafone as the Treo 750v - is reportedly doing well in Europe. A delay in carrier (likely Cingular - the operator that recently delivered the company's latest Palm OS model, the Treo 680) approval is the reason for the snag Palm hit in getting the smartphone in U.S. customer hands.


        Treo 750

The 750 is particularly important because it is Palm's first Windows Mobile Treo model for GSM carriers. The other Microsoft-based Treos (the 700w and 700wx) shipping in the U.S. are only available from CDMA carriers (e.g. Sprint, Verizon Wireless and Alltel) in this country.

Cingular, in addition to being a GSM operator, is the largest carrier in the U.S.

Palm said the 750 should ship early in its third fiscal quarter. But it is highly unlikely the smartphone will be available in time for the holiday shopping season. The likelier scenario is that the new model will hit store shelves sometime in January.

More on Treo 750
When the Treo 750 does ship here, users will find a smartphone that is just as, if not more advanced, than Palm's CDMA Windows Mobile Treos. And there's every reason to believe the Cingular edition of the 750 will feature the same basic specs as Vodafone's version.

If that's the case, then Cingular's 750 will be a quad-band world phone that weighs 5.4 ounces (154 grams) and measures 4.4 x 2.3 x 0.87 inches (111 x 58 x 22 millimeters). Like the new Treo 680, the 750 nixes the Treo external antenna for an internal.

It'll run on Windows Mobile 5.0, a 300 MHz Samsung processor, and 128 MB of nonvolatile flash memory (60 MB user available). There should also be square 240 x 240 pixel resolution touch display that supports over 65,000 colors.

A 1.3-megapixel camera for picture and video will let you take images up to 1280 x 1024 pixels in size with a 2x digital zoom. For audio, there's going to be a microphone, speaker, a 2.5-mm headset jack, and Bluetooth with support for stereo headsets. There's also a miniSD expansion slot and a replaceable/rechargeable 1200 mAH lithium-ion battery that Palm says offers 4.5 hours of talk over a GSM connection and 10 days standby time.

Palm ships Vodafone's 750v with Microsoft's Messaging and Security Feature Pack (also known as AKU2), which includes Direct Push and data access to Exchange server. This delivers push e-mail, calendar entries, contacts, and tasks; native S/MIME support, certificate-based authentication to all Exchange data; and remote and local device wipe.

As with previous Windows Mobile Treos, the 750 includes enhancements exclusively added by Palm and not available to other devices running Microsoft's wireless platform. These would include Today Screen improvements, such as the ability to "dial by name" with a few keystrokes on the keyboard, perform a web search directly from the Today Screen, and one-touch dialing with personalized photo speed dials.