Buoyed by stronger-than-expected handheld computer sales, Handspring on Tuesday posted a fiscal second-quarter loss that was several cents narrower than Wall Street estimates. Excluding the amortisation of deferred stock compensation, the company reported a loss of $7m (£4.76m), or 7 cents per share, on revenue of $115.6m. The company had been expected to lose 16 cents per share and had earlier guided analysts to expect sales of $95m to $105m. Handspring shares closed off $2.75 to $44.88 but moved up to $48.25 in after-hours trading. However, several analysts had predicted better sales and a narrower loss given reports of strong holiday sales. "We found the holiday season came a bit late, but it came with great gusto," chief executive Donna Dubinsky said on the company's conference call. Including the compensation costs, Handspring lost $15.2m, or 15 cents per share. Handspring boosted its sales outlook for the current quarter, which it had previously said could be below the $95m to $105m it was expecting for the October-to-December quarter. "However, given the continued strong reception of our product, we now believe revenue for the March quarter...should slightly increase (to) the range of $117m to $123m," Bernard Whitney, Handspring's chief financial officer, said during the company's conference call. With the new, higher priced models, Handspring's gross margins increased to 31.4 percent, up slightly from the prior quarter. Whitney now expects gross margins to rise to 31.8 percent in the March quarter. For this calendar year, Whitney said the company now predicts revenue of $560m to $590m with gross margins averaging 32.5 percent to 32.8 percent. That translates to a loss of 10 cents to 16 cents for the calendar year, Whitney said. In other news, Dubinsky said that the component crunch is easing. "In general we have seen improved supply conditions," Dubinsky said. "We continue to feel our business is not constrained by component shortages." In contrast to the rather dire reports of PC stocks, handheld sales appear to have been strong and analysts say that the devices continue to remain popular. "Post-Christmas sales remain strong as Handspring continues to see strong demand for its product," Lehman Brothers analysts Joseph To and Dan Niles said in a research report last week. Dubinsky said Handspring will expand nationwide the launch of VisorPhone, an add-on module that turns its handheld computer into a cell phone. The company will do so this month by adding support for VoiceStream and Powertel wireless networks. The VisorPhone is already offered on Handspring's Web site for customers in California, Nevada, North Carolina, South Carolina, Georgia and Tennessee. These states are served by Cingular Wireless, the company formed by the merger of Bell South and SBC's wireless operations. The company plans to begin selling the VisorPhone in US stores later this quarter and expects to sell the devices in Europe by mid-year. See techTrader for the latest technology investment news, plus quotes and research. How can you get access to information and entertainment from just about anywhere? Find out with ZDNet UK's Mobile Technology Special. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read other letters.