This is a tough time to gamble on the cell-phone market.

Following on a weak report from BlackBerry maker Research In Motion (NASDAQ:RIMM), fellow phone freak Palm (NASDAQ:PALM) just reported a $0.40 loss per share on just $296 million in sales. Last year, revenue came in at $401 million with a $0.15 profit per share, but the good times have definitely stopped rolling.

Thanks to increased competition from smartphones such as the BlackBerry Curve and the Apple (NASDAQ:AAPL) iPhone, Palm simply can't command the premium pricing it once did on its multifunctional pocket rockets. Unit volume rose by a healthy 29%, but there's a grim tale here about the average selling prices.

Doing the math, we can see that the average Palm phone sold for $534 last year, but only $306 this quarter. These are wholesale prices to network providers such as Verizon (NYSE:VZ) and AT&T (NYSE:T), not necessarily what you'd pay for the phone in the store. But the next-generation iPhone is putting serious pricing pressure on other smartphones by going for a svelte $199 per feature-packed unit. Palm can ill afford any sort of price war right now.

On top of all of that, Sony Ericsson is joining the Greek chorus of doomsayers. The joint venture between Sony (NYSE:SNE) and LM Ericsson (NASDAQ:ERIC) is saying that demand for its phones is cooling down across the board. The market is changing more rapidly than some old-line competitors can keep up.

Palm's stock has lost around 64% of its value in the past year, and it's now worth less than a fraction of its split-and-dividend-adjusted IPO price. Don't expect a rebound to the glory days of 2000, unless management is holding some cards I haven't seen yet. If there are some hidden cards, they'd better be a whole stack of aces, or else this joker is heading for the discard pile of history.

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