The handheld company reported pro forma earnings of 21 cents a share on revenues of $285.3 million, slightly better than expected, but the company slashed forward guidance well below expectations. The stock fell 15 percent after hours after rising 5 percent during the day.

These results continue a negative trend for the PDA pioneer.

Gartner announced last month that palmOne's 2004 revenue declined by 9.4 percent and its market share slipped to 19.3 percent down from 24.9 percent in 2003. PalmOne still however held the top spot in terms of units shipped at 3.7 million units, which was a 10.7 percent decline from the previous year.

The decline of PalmSource's top licensee’s shipments also translated into the Palm platform losing its crown as the leading PDA OS. Its share of the PDA OS market dropped to only 36.3 percent in 2004 from 50 percent in 2003.

Dark Clouds Ahead?
With smartphones set to dominate handheld sales in the near future, a report last Fall by ABI Research puts another fly in Palm's ointment. The research firm predicted that leading smartphone platform provider Symbian's share of the worldwide wireless phone OS market would hit 50 percent by 2009, with most of the rest of the market being seized by Microsoft with Windows Mobile.

With Symbian and Microsoft battling it out for the lion’s share of the smartphone market that leaves Palm and others fighting over the leftovers. Of course, the scraps may still be worth hundreds of millions of dollars.

And then there's wild card Research In Motion, which has been going gangbusters of late with its BlackBerry devices and push-based e-mail and data access solutions. Some predict RIM could soon become the top-selling handheld company.