Palm yesterday announced both that it is to cut 250 jobs, and that it expects second-quarter profits to be higher than forecast.

The job cuts "bring our resources into alignment with the needs of our Solutions and Platform Solutions businesses", Palm said. On the profits front, Palm expects to report revenue for its second quarter – which ends on Friday – of between $250 million to $280 million. This is the upper range of its previous forecast.

The double announcement comes as the company is engaged in an extensive realignment of its business practices following the resignation of former CEO Carl Yankowski. It also follows the closure of its portal.

Commenting on Yankowski's departure, Kevin Burden, an analyst with International Data Corp, said: "It's somewhat of a recognition that Palm probably wasn't moving in the right direction in the past year. Palm has almost looked as though it was standing still over the past year."

Palm faces stiff competition in the handheld market from Palm OS-using licensees, such as Handspring, as well as from the rise of Pocket PC devices.