Up 40%. Anyone who has been in the market awhile knows that's a decent gain over two years. That's the bump up that shareholders in palmOne (NASDAQ:PLMO) enjoyed just this morning after the PDA maker released fourth-quarter and full-year earnings numbers that surprised everyone.

The digits that started the stampede include a 23% revenue jump for the fourth quarter and earnings of $0.27 per share, more than double the $0.13 expected by analysts. Inventory turns were improved and operating expenses were slimmed drastically. Impressive, to be sure, but it still left the company with red ink of $0.55 per share for the whole year.

Moreover, palmOne hasn't exactly told the whole story, at least not in the press release. The firm has been through many costume changes in the past year, splitting from monolithic Palm into a pair of related enterprises: handset maker palmOne -- which gobbled up rival Handspring -- and operating system provider PalmSource (NASDAQ:PSRC).

The trouble is, palmOne's latest earnings releases don't include Handspring's prior-year results, which exaggerates the combined firm's sales growth. After all, Handspring sold $100 million worth of Treo communicators in its fiscal year 2003. That figure alone would account for most of the full-year revenue gain reported today.

Other interesting tidbits got short shrift as well. For instance, the firm proudly announced selling 4.1 million units in fiscal 2004, but neglected to mention that the total falls short of the 4.2 million it sold last year.

The rosy management guidance for 2005 includes 32% revenue growth and earnings around $1.20 per share. That might explain the firm's new price tag, $30 per share, valuing it about 25 times the projected earnings. But with the Treo phone/PDA expected to provide half of revenues in the future, that pins palmOne's future to a product that sees increased competition from Nokia (NYSE:NOK), Motorola (NYSE:MOT), Ericsson (NASDAQ:ERICY), NEC (NASDAQ:NIPNY), and Sony (NYSE:SNE), which recently began a withdrawal from the PDA market. This is no slam dunk, and potential investors would be wise to curb their enthusiasm.

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Fool contributor Seth Jayson has no position in any firm mentioned. View his Fool profile here.