Palm has confirmed Wall Street's worse fears and posted results for its last quarter that are half what analysts predicted.

"Our recent underperformance has been very disappointing, but the potential for Palm remains strong", said Jon Rubinstein, Palm chairman and chief executive officer on the back of poor sales of the Palm Pre and Palm Pixi phones.

Although the company shipped a total of 960,000 smartphone units during the quarter to stores around the world, it only managed to sell 408,000 units to customers, down 29% from the second quarter of fiscal year 2010 and down 15% year-over-year.

"The work we're doing to improve sales is having an impact, we're making great progress on future products, and we're looking forward to upcoming launches with new carrier partners", said Rubinstein.

But the positive outlook from the CEO hasn't been enough to calm stockholders. Shares have plunged a further 14% on the back of the earnings report. The drop in value means that Palm stock is worth half what it was at the beginning of the year.

Perhaps admitting defeat chief executive Jon Rubinstein said on a conference call with analysts that "Our recent underperformance has been extremely disappointing to me personally".