Palm has reported revenues of $265 million for the second quarter of fiscal year 2003, which ended on November 29.

Palm Inc consists of two operating units, Palm Solutions Group and PalmSource. Its revenues are down nine per cent from the $291 million reported for the year-ago quarter, but up 54 per cent from the first quarter of fiscal 2003. Net income for the quarter was $3.5 million.

Palm chairman and chief executive officer Eric Benhamou said: "Our return to profitability fulfils a commitment we made to our shareholders a year ago and we view it as a major milestone.

"A key driver behind our performance this quarter was the successful introduction and favourable market acceptance of two major products under our new sub-brands Zire and Tungsten.

"Together with our new Palm OS 5 operating system, we're demonstrating how Palm's tradition of innovation continues and how our new product engine is executing with renewed vigour."

During the quarter, Palm Solutions shipped approximately 1.4 million Palm branded handhelds, bringing cumulative shipments to more than 20 million.