Pre helps Palm beat expectations, shares rise

By Gabriel Madway

SAN FRANCISCO (Reuters) - Palm Inc (PALM.O) posted a narrower-than-expected fiscal fourth quarter loss on Thursday, and highlighted strong demand for its just-unveiled Pre smartphone.

Palm's shares rose more than 14 percent in after-hours trading.

Executives said early signs were promising for the Pre, which will compete head-to-head with Apple Inc's (AAPL.O) iPhone and Research in Motion's (RIM.TO) BlackBerry and which Palm hopes will lead the company out of persistent losses.

Palm said demand for the Pre was exceeding its expectations. The device is expected to enhance margins at the company, which in past years has steadily relinquished market share to rivals.

Avian Securities' Matthew Thornton estimated Palm booked revenue for 70,000 Pre units in the May quarter, which ended May 29. He said that, along with a more favorable tax rate and lower-than-expected operating expenses, helped the company blow by Wall Street estimates.

"We're successfully ramping supply to meet demand that is strong and growing," Chief Executive Officer Jon Rubinstein told analysts on a conference call, referring to the Pre.

The device, which went on sale at the beginning of June, has garnered generally favorable reviews. Analysts estimate Palm has shipped about 150,000 units so far.

The Pre's impact will be more fully reflected in the current quarter, because of its June launch date. Sprint Nextel Corp (S.N) is the exclusive U.S. carrier for the device.