Handheld software vendor PalmSource Inc. plans to cut 16 percent of its U.S. workforce even as it reported Thursday that it reversed previous losses and posted net income of US$18.3 million for the fourth quarter of 2005. That compares with a $2.9 million loss in the same quarter one year ago.

In an announcement Wednesday, the Sunnyvale, Calif.-based company said that for the entire fiscal year, which ended June 3, the company posted $19.5 million in net income. A year ago, it reported a full fiscal year loss of $15.2 million.

Fourth-quarter revenue totaled $17.3 million, down slightly from the $17.6 million reported in the same quarter one year ago. Full-year revenue topped out at $71.9 million, compared with $73.1 million for fiscal 2004.

Fourth-quarter earnings per share were $1.12, compared to a $0.23-per-share loss one year ago.

"While we still face significant challenges over the next several quarters, we continue to move forward with our development efforts in the broader mobile phone market," Patrick McVeigh, interim CEO of PalmSource, said in a statement. "We are committed to our transition to Linux-based platforms that deliver a great user experience."

As part of efforts to improve its financial standing, the company announced an internal reorganization of its product development, administrative, marketing and sales departments. Under the plan, PalmSource will cut 16 percent of its approximately 230 full-time U.S.-based workers and has taken a $2.7 million restructuring charge to pay for the layoffs.

More than half of the staff cuts were middle and senior management positions, including three senior vice presidents, according to the company. The move is expected to save about $6 million in salaries in fiscal year 2006.

"This reorganization reflects the evolution of our business model, as we have taken action to tighten our focus over the next 12 months," Jeanne Seeley, PalmSource"s chief financial officer, said in a statement. "By streamlining our product development efforts and administrative functions, and combining our sales, marketing and business development activities, we not only expect to increase internal synergies between these groups, but we are also aligning our cost structure with the reality that we are in a new product development period."