Palm financials shows importance of Pre

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Palm has said it expects its revenue will drop by 73 per cent in the third quarter, heaping more pressure on the success of the newly-announced Pre.

In the same period, the company tore through $100 million (£71 million) of its cash reserves, leaving it with $220 million to play with as the launch of the Pre looms.

The quarterly report was ominous across the board. Income for the period is estimated to be between $85 million and $90 million, painfully short of the $312 million it made during the same period in 2008.

The company blamed the results on low demand for older products, such as the Treo Pro, but reaffirmed that Palm's future is bright.

"The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," said Palm chief executive Ed Colligan.

In order to ensure there's enough cash in the kitty to ensure the launch goes smoothly, Palm will force investor Elevation Partners to sell $49 million worth of its stake to other investors on better terms by 31 March.

Palm is entitled to retain any profits from such remarketing, and can confidently expect a healthy return due to the buzz surrounding the Pre.

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