A key product delay will mean lower sales for device maker Palm this holiday season during its second fiscal quarter of 2008, the company said Thursday.

The Sunnyvale, Calif.-based maker of portable communications devices said factors affecting its profitability as measured by gross margin this quarter are unexpected warranty repair expenses, higher than expected sales of the Palm Centro smartphone and a delay in a product shipment.

Preliminary figures show the maker of handheld devices will see sales of $345 million to $350 million in the second quarter its fiscal year of 2008. The company's previous estimate on October 1 was for sales between $370 million and $380 million. The company also predicted a loss for the quarter.

We are disappointed that we did not get a key product certified for delivery in the quarter, Ed Colligan, Palm president and chief executive officer said.

Recently, Palm sold a 25 percent stake to buyout firm Elevation partners. In a statement, Colligan said the company was focused on realizing the benefits and opportunities of that transaction.

Palm said the loss would be in the range of 22 cents to 24 cents per share on a GAAP basis. The company lowered its gross margin estimate to between 29.3 to 29.8 percent on a GAAP basis.

Full results for its second fiscal quarter of 2008 will be released on December 18.

California Electronics