UPDATE 4-Pre helps Palm narrow loss, unveils share sale
* Pre sales judged to have exceeded forecasts in Q1
* Sees Q2 non-GAAP rev $240-$270 mln, below Street view
* Shares down 2 percent (Adds CEO comment, details on Pre sales)
SAN FRANCISCO, Sept 17 (Reuters) - Robust sales of the Pre smartphone helped Palm Inc (PALM.O) post a smaller-than-expected loss, but a tepid second-quarter sales forecast and a plan to sell more shares helped snuff out a rally and sent its shares down nearly 2 percent on Thursday.
Palm, which has lost money for more than two years, has staked its future on devices based on its webOS platform such as the Pre and Pixi device. It unveiled the Pre -- taking on Apple Inc's (AAPL.O) iPhone and Research in Motion's (RIM.TO) BlackBerry -- in June to mostly good reviews.
Palm's shares have quadrupled this year as investors bet the device would entice consumers.
It shipped 823,000 smartphones -- mainly the Pre -- in the fiscal first quarter, with many Wall Street estimates in the 700,000 to 800,000 unit range.
Palm forecast a second-quarter non-GAAP revenue of $240 million to $270 million, lagging an average forecast for revenue of just over $345 million.
Analysts said the company's move to raise capital also hurt the stock.
Palm said it plans to sell 16 million shares of common stock. Private equity firm Elevation Partners, which already owns a 33 percent stake in Palm, expects to buy $35 million worth of stock in the offering. [ID:nWNAB0861]
"They had a really strong 1Q. Obviously, well above expectations," said Avian Securities analyst Matthew Thornton, who estimated that Pre sales easily beat his forecast.
"But when you back out the first-quarter upside and the full-year guidance that they provide, then there really isn't much upside for the last three quarters."
THE CONSUMER, THE BUSINESS
Although Palm does not break out Pre data, it said the "vast majority" of smartphone sales came from Pre.
"We're receiving excellent reviews from customers who bought the Palm Pre for personal use," said Chief Executive Jon Rubinstein, appointed to the company's top post days after the Pre was launched to the public. Continued...
