The handheld PC maker Palm has reported a smaller loss than expected in its most recent quarter.
Palm's upmarket Tungsten models
The company, which recently announced plans to buy its closest rival Handspring, said that sales of its pocket-sized digital organisers had improved.
For the quarter ended May 31, Palm reported a net loss of $15m, compared with a loss of $27.5m in the same period a year ago.
The company's sales came in at $225.8m, down from $233.3m last year, but better than estimates of $187m, according to Thomson First Call.
I would not attribute this to anything more than the market stabilising
Booz Allen Hamilton
Barry Jaruzelski of technology consultant Booz Allen Hamilton said the results prove the handheld market is finding level ground.
However, he added it did not show a significant rebound in Palm's fortunes.
"I would not attribute this to anything more than the market stabilising," he said.
Handhelds lose favour
The pocket PC market has suffered in recent months as consumers became reluctant to buy pricey models on offer.
According to market monitors International Data Corp, global sales of handheld devices, or personal digital assistants (PDAs), fell by 21% in the first three months of the year.
In particular, restructuring charges and poor sales pushed market leader Palm heavily into the red earlier this year.
However, sales of Palm's "Zire" line of lower-price models have since helped to boost the bottom line.
The deal with Handspring is expected to go ahead in the autumn, once Palm has floated its software business PalmSource on the Nasdaq stock market.
The acquisition will reunite Palm with its founders: Handspring's chief executive Donna Dubinsky, and its chairman, Jeff Hawkins.
Ms Dubinsky and Mr Hawkins founded Palm in 1992, but left to set up Handspring in 1998.