Palm optimistic after rocky quarter

The company credited roughly US$20 million of that loss to compensation and restructuring costs as it attempts to shift its business plan to better accommodate the consumer smartphone market.

In addition to its own restructuring, Palm faces stiff competition from longtime rival Research In Motion and the growing threat of the Apple iPhone, which launches a 3G model next month.

Palm said in its quarterly earnings report that despite the loss, the company remains optimistic about its prospects in the long run.

One of the main reasons for that optimism is the success of Centro. The low-cost handset has pushed Palm's hardware sales to record numbers.

"We continue to invest in Palm's future and remain focused on building long-term value," said Palm president and chief executive Ed Colligan.

"Centro is a tremendous hit, we are gaining market share, and we believe with this momentum, and the launch of new Windows Mobile products, we will turn the corner and return to revenue and margin growth."

Unfortunately for the company, Wall Street did not share Colligan's rosy outlook. Following the release of the earnings report, Palm stock fell by some 11 percent, according to Dow Jones.