2nd UPDATE: Palm Pre Demand 'Strong and Growing' Says CEO

Palm Inc. (PALM) Chief Executive Jon Rubinstein said Palm's Pre smartphone sales have been "strong and growing," but didn't get any more specific about the smartphone's sales.

"I couldn't be happier with our launch," Rubinstein said on a conference call to discuss the company's fourth quarter, it's last full quarter before releasing the phone. For the quarter, Palm's loss widened as revenue plunged, but results topped analysts' estimates.

Shares were up 14% at $15.83 in after-hours trading.

"We are exactly where we hoped we would be," he said.

The company is confident it can continue to have enough Pres on hand to meet demand, barring any unseen surge in demand, he said. "The factory is ramping really well," he added. "But if demand increases, we'll have to chase it a bit."

Palm executives also said they will not provide specific Pre sales figures. Analysts expect Palm's exclusive U.S. partner, Sprint-Nextel Corp. (S), to sell 100,000 Pres in June, and another 200,000 in August.

Sunnyvale, Calif.-based Palm is hoping the Palm Pre can resurrect its moribund smartphone franchise amid stiff competition from Apple Inc. (AAPL), which began selling a new iPhone June 19. First weekend sales of the iPhone 3GS exceeded expectations.

So far, all signs point to a stronger-than-expected launch for Palm's Pre, speculation of which boosted the company's shares to a 52-week high last week and fueled rumors the company is a prime takeover target.

On the conference call, Palm executives said they are working to correct the paltry amount of downloadable programs, known as "apps," that Pre owners can now choose from. Increasingly, sales of the smart phones, like the Pre, are driven by the number and quality of available apps.

Palm's online store has about 40 apps to choose from. Apple's App Store distributes more than 50,000 different apps, by comparison. Palm plans to release a set of tools to make and sell apps sometime this summer, which should help expand its app catalog significantly.

Since the Pre went on sale June 6, Palm has not provided a sales figure. It has said that first day and weekend Pre sales were the highest of any device in its history. The device faces stiff competition. Apple's iPhone 3GS first weekend of sales exceeded expectations.

As has been its custom, Palm didn't provide a quarterly forecast.

The Pre was designed to revive Palm's slowing smartphone business, which has suffered market-share loss to the popular iPhone and BlackBerry family of devices. The Pre offers both a touch-screen and a slide-out keyboard, and is the first device to use Palm's newly built webOS platform.

-By Ben Charny, Dow Jones Newswires; 415-765-8230; [e-mail].