Palm insists Foleo will ship on time

Palm denied a recent industry report that its new Foleo mini-notebook would be delayed and said the device was still on target to launch in the U.S. "this summer," or by the end of the third quarter.

The company was responding to a report suggesting that bugs in Foleo's software will delay the launch of the device from the end of August to as late as early October. The software bugs are preventing Foleo from correctly synchronizing data with Palm's Treo smartphone, according to a report posted Wednesday on Barron's Tech Trader Daily blog. The report was based on an earlier research note by a Deutsche Bank analyst.

Palm unveiled Foleo in May, calling it a 2.5-pound "smartphone companion." The device will initially only be able to sync up with Palm's own Treo smartphones. Foleo allows users to read their office documents more easily on its 10-inch display than on a cramped smartphone screen and type e-mail messages more easily on its full keyboard than on a thumb-operated keypad.

Palm insisted on Friday that it was still on track to meet its original shipping schedule for Foleo.

"As stated on May 30, U.S. availability for the Palm Foleo mobile companion will begin this summer. We will let you know if this changes," said Jim Christensen, Palm's director of communications.

Regardless of when Palm begins to sell the Foleo, any delays to the new product will not have a major impact on company earnings, one analyst said.

"This is a minor glitch. If they're a year late, it's a problem, but if they're a couple months late, it's not going to make any difference -- all their money's in the Treos," said Jack Gold, principal analyst at J.Gold Associates.

"I'd be more concerned if their new phones were late; then we'd be talking about tens of millions of dollars. But at best it's [Foleo's] going to be a slow burn for them; this thing's not going to take off," said Gold.

Even strong sales of its Treo smartphone may not be enough for Palm. On June 28, the company reported a profit of $15.4 million for the fourth quarter, a 44 percent drop from its profit a year earlier.

In recent years, Palm has been shifting its product portfolio away from PDAs, a market it pioneered, and towards smartphones, which offer potentially much greater profit margins because of their higher price tags. The Foleo represents another step toward larger, more expensive products. But industry skeptics are dubious about its prospects, saying that smartphone owners may be hesitant to carry a second device in their pockets or to pay $499 for Foleo to make existing features easier to use.