At least one analyst was bearish on Palm Inc.'s softening margins, after the Treo and Centro smart phone maker posted a fiscal fourth-quarter loss.

After Thursday's closing bell, Palm said sales of higher-margin Treos slowed and helped offset strong sales of its cheaper, low-margin Centro devices.

Palm's adjusted quarterly loss also missed Wall Street expectations, and revenue was worse than expected.

In a statement, President and Chief Executive Ed Colligan said the company eventually expects to return to revenue and margin growth, helped by Centro's growing market share and the launch of new Windows Mobile products.

Citi Investment Research analyst Jim Suva said this marks the third quarter that Palm's loss has widened, while gross margins declined from a year ago.

Suva, who rates the stock "Sell," says competition is increasing in the smart phone market from rivals like Apple Inc.'s popular iPhone.

During the quarter, Apple said it was altering software for the iPhone so that it could work with Microsoft Corp.'s Exchange software, which businesses use to handle and secure e-mail.

The move makes the iPhone more of a direct competitor with Palm's Treo and Research In Motion Ltd.'s smart phones because they are popular with business users.

Suva's $3.75 price target implies downside of 42.7 percent to Thursday's close of $6.54.