Major jobcuts are expected at Palm after it said it would be cutting operating costs by 20% in response to poor sales.
The smartphone maker said sales were well down in the second quarter ended 28 November.
The firm has not yet posted official results but warned sales would be no more than £130m, which would be a drop on the previous three months and a fall on the amount for the same three months a year ago.
"The difficult economic environment has greatly intensified the negative impact on product sales", said Palm.
Ed Colligan, Palm CEO, said, "In order to ensure Palm's long-term success during these uncertain times, we are taking several steps to significantly reduce our cost structure. These measures will help us navigate this difficult period while launching our next-generation products as planned."
The company is implementing several cost-savings initiatives, including reducing its US work force, consolidating its European operations, and shifting responsibility for Asia Pacific sales, marketing and administrative support to its US offices.
The firm expects the measures to reduce operating expenses by more than £13m. It has not said how many jobs will go as a result.