Palm: Is the End Near?

By John Biggs

When your smartphone drops from $249 to $79 over a summer, you have to wonder what’s going on. Two rumors are circulating this AM, one that Palm is laying off folks, perhaps in the Windows Mobile team.

The estimated sales for the Pre topped out at 375,000 at the end of August and they went from $299 ($199 after rebate) to about $79 in about eleven weeks. While this might be normal for a feature phone – the subsidy kicks in once they’re sure that the early adopters who simply must have the LG Chocolate have had their fix – this isn’t good for a smartphone that was supposed to be the lead invasion force for a new WebOS smartphone renaissance.

Finally, Palm (PALM) has finally backed off over iTunes Syncing. The latest WebOS update doesn’t sync with iTunes and won’t be syncing with iTunes any time soon. After using brute force and then running to the USB standards body, the company may have finally given up.

The end of Palm will come quickly this time. They’ve been idling for too long – since about 2004, in fact – and if they can’t push through their first year with at least some modicum of success it’s over.

Original post

Comments

[H in Roch:]

This is quite inaccurate and biased commentary by someone who obviously hasn't been following the company. Their demise is most certainly not imminent.

There is long term risk certainly, but raising $360 on the open market pretty much precludes any short term risk. Profitability in the current and expected future quarters should vastly reduce any intermediate term risk.

Perhaps the author should divulge any personal interest or investments in this company in the interest of full disclosure...

Sep 30 10:25 AM

[Yagottabe K...:]

Though Palm is not a success at selling Palm phones, they are an EXCELLENT success at selling Palm shares. They have a massive cash balance now NOT due to any particular well-selling phone but instead due to mostly ONE deep-pocket investor. As long as that deep-pocketed investor continues to throw money at them, they'll do "fine"!

There may be a =slight= hint that the deep-pocketed investor is pulling back a little, however, since THIS time "only" $35 million was thrown at Palm.

But in any case, Palm has enough cash now to last more than a year with a series of unsuccessful phones!

I wouldn't count them out yet...lol!

Sep 30 11:00 AM

[CGP:]

The fast price drop is certainly troubling but my guess is that they're flushing the channel to possibly prepare for the next iteration of devices, pump up cash flow and just get devices into the hands of users (certainly to the detriment of the bottom line).

I don't think there is a near to midterm worry as they are still in the process of rolling out WebOS; besides they can always pull the emergency M&A ripcord, the air is filled with the smell of deals as tech companies are ripe with cash and bolstered by a low rate enviorment.

iTunes compatability is just a red herring, it was never central to their strategy - just a talking point, a throwaway.

Do you have anything of substance techcrunch? This was like the guy with the scraggly beard and the dirty robes carrying the sign saying.....

Sep 30 11:17 AM

[Louie Junior:]

Dilution is good for money-loser PALM. It will make their perpetual losses seem much smaller -- on a per share basis. And all this new equity is to fund Working Capital! I agree with the author 100%.

Sep 30 11:55 AM

[Paul Johnson:]

Acquisition bait -- Microsoft, Nokia or RIM.

Sep 30 01:13 PM

[GoochyPuppy:]

@Paul: Microsoft has no interest in WebOS or phone hardware. They still cling to the hope that Windows will run ... everywhere.

Sep 30 01:28 PM

[Aryamehr:]

Head to head I still believe the Pre is a better smart phone than the iPhone. What it lacks in applications it definately makes up in convenience and innovation. On the convenience side it interchangable battery works well for those of us that put our Phones to use and its Touchstone charger is innovative and convenient. Its Multifunctioning and Synergy functions are innovations still lacking from the latest iteration of the iPhone. The GS might have caught up with the Pre's 'cut & paste,' but there are many areas the iPhone GS is still lagging. Now you can continue rebutting me with your extra memory, app store and itunes, however they don't carry much weight. I would never trade access to Amazon for iTunes and the extra memory is no innovation, it is something any carrier can add to their phones.

Oct 01 12:20 AM

[SharonW:]

Biggs is an idiot who knows less than nothing about Palm. Palm has already denied the lay off rumor. Moreover, the $79 price was a limited time offer by who? Oh yeah, the supreme price under-cutters Walmart! Amazon sold out their Pres this weekend and it is currently their number one seller in cellphones. Both buy their phones from Sprint and are attempting to launch their cell phone shops very competitively. Everywhere else the Pre is $149.

Palm just secured a second round of funding that was over-subscribed. They've got plenty of cash to stay the course while producing new product, the Pixi, and producing for multiple countries now not just the U.S.

The Pre launched in Canada just one month ago, and is scheduled to launch in the UK, Ireland, Germany, Spain, and Italy in Oct. Then it goes to Verizon in three months and AT&T.

God, if you're going to criticize, at least have and use real facts.

Oct 01 12:21 AM

[SharonW:]

And pages four and five of AdMob's Mobile Metrics report ought to make the author cringe. Amazing how in just three months a "supposedly poor selling phone" grabbed a 9% mobile web share and becoming the third most widely used smartphone for the web. They creamed Microsoft Mobile in three months and are gaining on long established RIMM!

metrics.admob.com/wp-c...

Oct 01 12:45 AM

[GSlusher:]

Unfortunately, the Pre cannot do the most-used form of "multi-tasking": accessing data while making a phone call. With Sprint and Verizon's systems, you can do one or the other, but not both at the same time. It's a basic limitation of their technology. This could well be the death of the Pre.


On Oct 01 12:20 AM Aryamehr wrote:

>Its Multifunctioning and Synergy functions are innovations still >lacking from the latest iteration of the iPhone
> innovation, it is something any carrier can add to their phones.

Oct 01 06:40 AM

[classic:]

does anyone have any comments on rfmd

Oct 01 02:28 PM

[AZ1234:]

SharonW is right on with the facts. Glad to see someone other than me pointing out fact over Palm hating fiction.

Sounds like this article's writer is one of the MotleyFool idiots in disguise. lol

Some other Palm hater recently floated the false rumor that Verizon wasn't interested and that went nowhere fast.

This article's writer mentioned Palm backing off from iTunes synch...wrong...the Pre's baaaaack! lol

Watch this stock rise in December as the Pixi is unveiled and the countdown to Verizon begins.

With the Pixi, Verizon, Palm's apps store, distribution in Canada, Germany, UK, Ireland, Spain, Italy...and CHINA (coming soon), Palm's future is bright and $30/share is a fast in the early part of 2010. Because this company has many positive things in its future, including increased market share and being cash flow positive in the second half of next year, the stock price will continue to rise.

Anyone who scoffs at Palm and predicts its death has been doing so for months as the stock price rises and rises. They're ignorant haters.

SharonW, I salute you. You've got a truth ally in me!

Oct 05 07:52 PM