Palm sales double

Palm was spun off from 3Com last year

US computer maker Palm has more than doubled sales of its handheld organizers in the run up to Christmas.

The company reported sales of $522m in the second quarter to December, more than twice the figure for the same period last year, beating Wall Street expectations.

Demand for its products in both US and international markets was "strong" as consumers' preference has shifted from home computers to handheld devices, the company said.

But the strong results failed to halt a slide in Palm's share price, which dropped 16% in after-hours trading on Wednesday.

Wireless technology

Palm, which spun off from computer giant 3Com last year, said it was having difficulties with a shortage of components for its popular electronic organiser, the Palm Vx and new entry level m100.

But the company reaffirmed Wall Street revenue forecasts.

Unit sales in the second quarter rose to 2.1 million from 1.5 million in the previous quarter, soundly beating many expectations.

Palm has now sold nearly 10.9 million organizers, with many more handheld products using its operating system.

The company said businesses and schools were buying more Palms and the company is sticking to its strategy of embracing wireless technology and licensing the Palm operating system to competing device makers.

"The global economy continues to shift to mobile handheld computing," said chief executive Carl Yankowski.

"It is a marathon and not a sprint," he added.

The slowdown in the sales of personal computers so far had not affected the cheaper personal organizers, he said.

"Consumers are saying they are buying smaller ticket items, but the good news is that they are still buying."

Shares tumble

Mr Yankowski also announced the $40-45m cash or stock acquisition of WeSync, a US wireless service company.

Palm's operating profit rose to $27.5m, or 5 cents a share, from $15.5m, or 3 cents per share, for the same period last year.

Palm shares tumbled after hours to $32.75 on after-hours trading after closing at a little over $38 on Nasdaq.

The stock had already lost $5.5, or more than 12%, during the day marked by sharp losses for technology stocks.