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Very strong sales of Treo wireless “smartphones” helped Palm, the maker of hand-held computers, report sharply higher second-quarter revenue growth while a big tax gain lifted profits to $260.9m.

Palm reported revenue of $444.6m in the quarter ended December 2, up 18 per cent from the year-ago period boosted by strong shipments of Palm’s Treo smartphones that compete directly with Research in Motion’s BlackBerry devices and other wireless e-mail communicators. Net income jumped to $5.02 a share from $24.7m, or 48 cents a share, a year earlier. The Sunnyvale, California-based company said net income reflected the effect of a partial reversal of a deferred tax asset valuation allowance of $226.3m.

The company, which is due to launch a new version of the Treo dubbed the 700w early next year, said Treo shipments jumped by 86 per cent in the latest quarter to 602,000 units, consolidating its position as one of the leading manufactuers of “converged” voice and data mobile devices.

“Achieving the eighth consecutive quarter of year-over-year double-digit revenue growth and growing our converged device market share to 36 per cent in the US are significant accomplishments,” said Ed Colligan, chief executive.

“We shipped more than one million Treo smartphones during the first half of fiscal year 2006, which is just shy of what we shipped in all of fiscal year 2005. With our strong market position and excellent execution, I have confidence in our long-term growth opportunity.”

Looking ahead, Palm said it expected to report fiscal third-quarter revenues of between $370m and $375m, gross margins of between 33 per cent and 33.5 per cent and earnings per diluted share of between $0.46 and $0.49 a share.

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