Ten years ago, Palm (NASDAQ:PALM) launched its first products, the Pilot 1000 and Pilot 5000 organizers. Since then, despite much tumult, the company has continued to innovate, and thanks in large part to its line of Treo smartphones, it's now growing at a nice clip. But can it continue as the competition mounts?
Fourth-quarter results bore that out. Revenues in Q4 surged 36% to $388.5 million. Net income was up from $10.6 million, or $0.10 per share, to $19.8 million or $0.19 per share, excluding one-time items.
Palm sold 569,000 Treo units during the quarter, a 102% increase from the same period a year ago. The company owns about 30% of the smartphone/PDA market in the United States.
Along with its partner Microsoft (NASDAQ:MSFT), Palm is continuing to launch innovative devices. The Treo 700w, which is based on the Windows Mobile operating system, comes with cool features such as dial by image, Google searches, and the ability to decline incoming calls via a text message.
As for the outlook, Palm pegs revenue for the second quarter at $400 million to $405 million, with earnings per share of $0.22 to $0.23, excluding one-time items.
In the meantime, though, the corporate market for smartphones should intensify, now that Research In Motion (NASDAQ:RIMM) settled its BlackBerry lawsuit -- a situation on which Palm was unable to capitalize -- and can begin focusing its energies on the corporate smartphone market. Other biggies, such as Nokia (NYSE:NOK) and Motorola (NYSE:MOT), will be getting in on the action, too.
So while it was smart for Palm to link up with Microsoft, the company still has to contend with major players. And with more options on the market, expect pressure on pricing and growth. In other words, the big gains that Palm shareholders have become accustomed to over the past year may be a nice memory, not a sign of things to come.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.
