Palm, the leading maker of handheld computers, has reported that sales slumped 47% between June and August.

And the company racked up losses of $38.7m (�26.4m) compared to a profit of $23.9m in the same period the previous year.

Palm has blamed slowing demand and tough competition for the fall that pushed revenues down to $214m compared to $410m a year earlier.

During the three months, the company shipped 750,000 Palm devices, bringing its cumulative sales to more than 14 million.

Consumer confidence knocked

And Palm chief executive Carl Yankowski admitted that he no longer expects the company to post a profit in the current quarter.

Mr Yankowski also said that the 11 September terrorist attacks on the US will have a negative impact on consumer confidence and therefore the company.

The company slashed 15% of its workforce in June in an effort to cut costs.

There has been some speculation that the firm may run out of cash before the end of the year.

But the loss was smaller than had been expected on Wall Street, and Palm shares moved up to $2.23 from a previous close of $2.15.