Palm (PALM), the onetime smart-phone pioneer now on the rocks, is racing against the clock as it burns through cash in a last-ditch effort to turn its business around. Despite positive buzz and strong sales of its Pre device, the company reported its ninth consecutive quarterly loss Thursday as revenue dropped a shocking 82 percent to a mere $68 million.

Still, the company beat Wall Street's paltry expectations, sending its shares higher initially in after-hours trading.

Former Apple iPod ace Jon Rubinstein, whom Elevation Partners brought in to right the firm, is literally scrambling to turn the company around before the money dries up. In a blatant attempt to raise cash, the company said it plans to issue 16 million shares of common stock.
The numbers weren't pretty: Palm reported a loss of $161.1 million, or $1.17 a share, compared with a loss of $39.5 million, or 39 cents a share, a year earlier. The company also offered an outlook for next quarter's revenue of $240 million to $270 million, while Wall Street analysts had estimated $347 million.

Palm's gross margin -- or how much the company's products cost to make versus how much they sell for -- was an alarming negative 4.5 percent for the quarter, compared to 26.5 percent last year.

Despite the very bad financial results, Rubinstein has been pledging that Palm is making a comeback."Making new products is hard," he told DailyFinance earlier this week in an interview. "We're up against a lot of tough competition. But we will be in the top five players in this space."

Palm said it shipped 823,000 smart phone units during the quarter, down 30 percent from last year. But compared with the prior quarter, shipments more than doubled, thanks to healthy Pre sales.

"We're making significant progress with Palm's transformation, and our culture of innovation is stronger than ever," Rubinstein, said in a statement accompanying the earnings announcement. "We're launching more great Palm webOS products with more carriers, and turning our sights toward growth."

The Pre has gotten good reviews and the upcoming Pixi shows promise, but it remains to be seen whether fickle teenagers will embrace the device, which will cost less than $100. The company is facing stiff competition from Apple's iPhone and Research in Motion's BlackBerry line, as well as Nokia and Motorola products.

Palm currently has $211.8 million in cash, but clearly Bono and Roger McNafee's Elevation Partners, the company's largest shareholder, feels the need for more cash, hence the 16 million share offering.

Palm said it plans to use the proceeds of the float for working capital and general corporate purposes. Elevation said it will buy $35 million of Palm's shares in the sale, at the public offering price.

Palm shares traded up 3 percent in after-hours activity Thursday before crossing into the negative.

Update: A Palm spokesman emailed DailyFinance with the following comment: "Under subscription accounting (required under our new products) most of our revenue is deferred and recognized in future periods. In prior years revenue was recognized entirely in the period of sale," the Palm spokesman said. "The correct comparison would be to compare our 2009 results with our non-GAAP information which is included in our earnings release and is prepared on the same basis of accounting as our prior year. Comparing numbers reported on the same basis of accounting results in $360.7 million in Q1 of FY10 (our non-GAAP reported results) vs. $366.9 million for the Q1 of FY09."

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