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Palm's earnings drop 7.1% due to lower sales, high costs

SAN JOSE, Calif. (AP) — Handheld computer maker Palm Inc. said Thursday its profit fell 7.1 percent in the first quarter due to sagging sales of digital organizers and higher costs, although the company also saw 25 percent revenue growth driven by white-hot sales of the Treo smartphone.

The pioneer in digital organizers said it earned $18.2 million, or 35 cents per share, in the three months ended Sept. 2, compared with $19.6 million, or 38 cents per share, in the same period of 2004.

Excluding special items, such as amortization and deferred stock-based compensation, Palm would have earned $21.1 million, or 41 cents per share, down from $21.9 million, or 43 cents per share, in the first quarter of 2004.

Palm, based in Sunnyvale, Calif., reported first-quarter revenue of $342.2 million, up from $273.1 million in the year-ago period.

Palm CEO Ed Colligan said that sales of Treo smartphones —the hybrid device that acts as a cell phone and digital organizer — rose 163 percent while sales for personal digital assistants fell 22 percent.