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Palm (PALM) announced yesterday that certification of its Treo 750 line of SmartPhones will not be certified in time for the all important Christmas season in the US. The line has not been fully certified for use will relevant phone service carriers in the US.

As a result, they have cut their near term sales projections and the stock is off, trading pre-market today at $14.42 from an open yesterday at $15.91.

Earnings before certain items are seen at 15 cents to 16 cents per share, compared with a September forecast of 20 cents to 23 cents per share, Palm said. Analysts, on average, were expecting earnings per share before items of 22 cents, according to Reuters Estimates

They did introduce their new Treo 680 line with Windows Mobile a few days ago, but the Treo 750 series which will run on the GSM/GPRS standard has not yet been certified for the US market. PALM now predicts availability for the Treo 750 in the following quarter. Unfortunately, they will miss the seasonal sales related to Christmas.

treo 750The Treo 750 runs on Microsoft Corp.'s operating system, while another new model, the Treo 680, uses Palm's operating system. The Treo 750 has a microprocessor made by Samsung while the Treo 680's processor is made by Intel. The delay does not affect the 680 model.

This delay along with prior estimate reductions, along with the likely cash drain due to the likely patent infringement suite with NTP (the same company that sued and settled with RIMM), makes PALM all the more vulnerable to a takeover by a strategic buyer.

What to PALM and MSFT Have in Common? In addition to collaborating with equipment and operating systems, both have had difficulty meeting launch dates for this Christmas season. Unfortunately for PALM, they don’t have the depth of sales and resources to sail as smoothly through the rough water as MSFT.

Palm said it expects to report revenue of $390 million to $395 million, down from its earlier forecast of $430 million to $450 million and below Wall Street's view of $442.3 million.

We continue to see PALM as a takeover candidate, perhaps more so now than yesterday.

Disclosure: Author has no position in PALM

Source: Palm's Warning, Delay May Increase Its Takeover Likelihood