Palm Inc. (NASDAQ: PALM) reported a dismal third quarter, losing $95 million or 89 cents per share. Although the company's Treo handheld wireless handset products are being beat into the ground by competitors like Research in Motion Ltd. (NASDAQ: RIMM) and Apple, Inc. (NASDAQ: AAPL), its bargain basement Treo Centro helped save the day last quarter. Not so much in the latest quarter.

But good news is coming. The company (and a whole community of pre-release fans) is expecting the new Palm Pre smartphone to be the device that would save the company in the current quarter. The new handset, which is shaping up to be a true, functional competitor to the iPhone, looks like a handset worthy of that stated comparison.

Palm, Inc. (NASDAQ: PALM), the dazed and confused mobile smartphone manufacturer, released Q2 numbers yesterday after the market's close, showing an expected loss for its most recent quarter. The company saw a $9.63 million loss ($0.09 per share) on quarterly revenues of just over $349 million as smartphone competitors, higher than expected warranty costs and shipping delays all influenced the company's performance. In the year-ago quarter, Palm made a net profit of $12.77 million on just over $392 in revenue.

And it gets worse, as Palm gave dismal guidance for the quarter in progress. The once-giant handheld PDA company admitted to seeing losses in the range of $30 million ($0.31 per share) for the current quarter on revenue expectations of $310 million to $320 million. Investors understandably did not like what they heard, driving down Palm's share price from Tuesday's close of $5.93 to $5.35 in after-hours trading.

What's next for Palm? After starting to sell the lower-price Palm Centro (a $99 smartphone) in its Q2 period and canceling the Foleo miniature notebook portable computer (if that's what it was), the company's CEO, Ed Colligan, has some shoring up to do or he'll be skating on thin ice in 2008. Wait, he already is. Stating that "It's a transformational time so things could be a bit lumpy, but we'll do our best to manage through that," Colligan must make some radical moves in 2008 or be shown the door. Investors aren't patient when it comes to one disappointing quarter after another in an industry expected to continue growth for the next several years.

Palm, Inc. (NASDAQ:PALM) CEO Ed Colligan was reported to have laughed off the idea of a smart-phone created by any company, including Apple Computer, Inc. (NASDAQ:AAPL). He seemed "downright nonchalant about rumors that Apple may introduce a mobile phone to the market in the coming year."

Memo To Ed Colligan: WAKE UP! Apple's phone, as reported yesterday in USA Today, is closer than ever to becoming reality. American Technology Research analyst, Shaw Wu said, "From a technical standpoint, the phone is pretty much done. It's a big endeavor and we believe it's beyond speculation."

Look out Ed Colligan (and the folks at RIM), Apple took over the digital music industry, has regained its brand esteem in the computer biz, and it is poised to make some noise in the mobile phone sector too. Did I hear a pin drop?