Palm Cuts Jobs Amid Stiff Competition

SAN FRANCISCO — Struggling smartphone maker Palm said Friday it is cutting its workforce, a move the company takes as it loses market share to rivals Apple and Research in Motion.

Spokeswoman Lynn Fox said the layoffs began last week, but she declined to say how many jobs would be cut.

Palm (NASDAQ: PALM), which employs 1,050 workers, makes the Centro and Treo smartphones. The company’s market share has been shrinking, with RIM’s (NASDAQ: RIM) BlackBerry becoming the device of choice for the business set and Apple’s (NASDAQ: AAPL) iPhone a consumer phenomenon.

“The goal is to consolidate resources and focus our efforts more effectively,” Fox said.

Palm has been staking its future on the launch of a yet-to-be-named operating system and device. Fox said the OS is on track to be released this year, and the device in the first half of 2009.

The company has hired top talent as it tries to right itself, poaching both Chairman John Rubinstein, who helped create the iPod, and senior vice president of product development Mike Bell from Apple.

But the smartphone market seems to grow more competitive by the day. News of Palm’s layoffs emerged as hundreds of people lined up at stores on Friday to buy the BlackBerry Storm, the first touch-screen phone for RIM.

According to data released Thursday by ChangeWave, only 5 percent of companies plan to buy a Palm smartphone in the next quarter, half the figure from a year ago. By contrast, 78 percent of corporations planned to buy a RIM device and 22 percent an iPhone.

Last week, Goldman Sachs initiated coverage on Palm with a sell rating, citing increasing competition and market share losses.

Palm shares have fallen around 65 percent this year. The stock shot up 45 cents, or 25 percent, Friday to close at $2.24 on Nasdaq.