Third-quarter revenue was actually more than Palm expected when it issued its warning last month. At that time, it said it was expecting revenue of between $300 million and $320 million. Still, Palm said not to expect a corresponding bump to full-year revenue. The revenue was better than Palm thought only because a couple of shipments slipped in unexpectedly before the end of the quarter, Jeffries said.

Palm reported a non-GAAP net loss for the third quarter of $102.8 million, or $0.61 per diluted share. That compares to a smaller loss in the same quarter last year of $94.7 million, or $0.86 a share. Analysts were predicting a loss for the third quarter of $0.42 per share.

"We are proceeding through a very challenging period," Jeffries said. "We are under no illusions about the hard work in front of us."

Palm has already begun executing on plans to improve sales and says that those efforts are beginning to pay off. It has started sending "Palm brand ambassadors" to essentially all Verizon stores to better train sales people on Palm products.

"But we know sales and marketing can only take us so far," Rubinstein said. So the company is working hard to improve WebOS products. WebOS is Palm's new mobile operating system. Since it launched on the Pre nine months ago, Palm has pushed out 10 over-the-air updates, he said. Those updates have improved battery life, enhanced all the core applications and boosted response times on the phones.