Palm warns of profit drop

After canceling its controversial Foleo product and continuing to struggle with a shift away from the personal digital assistant market, Palm warned on Wednesday that its upcoming earnings report could be weaker than expected.

For the quarter ending Aug. 31, Palm will lose $0.01 per share or break even, the company said. Earlier, the company had said it expected a loss of $0.01 or a gain of $0.01 in the period. That compares with a gain of $0.35 per share in the same quarter last year.

Palm also narrowed its revenue forecast to between $359 million and $361 million, instead of the previously expected $355 million to $365 million.

Palm will release its quarterly earnings report on Oct. 1.

The company is facing challenges as it changes its business from one focused on PDAs to one that specializes in smartphones. Earlier this month, Palm announced it wouldn’t ship the Foleo, a companion product to its Treo smartphone, as planned. When the device was announced, analysts said it would be too expensive and wouldn’t offer valuable features. Palm said it decided to focus instead on its own software platform that is due out in 2008 or 2009.