Palm's woes mount as its stock is devalued to $0 and unsold inventory estimates balloon

By on Mar 19, 2010 at 1:18 PM
News March 19, 2010

Palm-snap

Palm’s woes continue to balloon after the handset maker announced its earnings for Q3 2010. As a recap, Palm reported $349 million in revenue with a $22 million net loss for Q3 2010 which looks rosy when compared to the $90.6 million revenue and $98 million net loss reported in Q3 2009. Though revenue has increased and net loss has narrowed year over year, Palm continues its downward slide with net loss increasing from $13.7 million in Q2 2010 to the $22 million quoted above. Palm shipped 960,000 handsets in Q3 2010 which represents a 23% increase from Q2 2010 and a 300% increase year over year. This abundance of handsets is Palm’s downfall as the handset maker revealed that it has only sold a mere 408,000 units in Q3 2010, leading to a standing inventory that some estimate to be a staggering 1.15 million. Palm has put handset production on hold (told you so) while carriers sell through the current inventory which is equal to six months worth of retail sales at last year’s rate. As a result, Palm’s Q4 2010 outlook is dire with the company projecting revenue of only $150 million, a figure that falls far short of the $305 million that was expected. Read on after the jump.

Palm’s stock has plummeted a staggering 18% to under $5 since its poor Q3 2010 earnings and its dire Q4 projections were announced. Like a pack wolves, analysts are jumping all over the Sunnyvale, California company, issuing stock price targets as low as $0. Peter Misek of Canaccord Adams, who issued the $0 value, defends his pessimistic view of Palm by writing,

“We believe Palm’s troubles will only accelerate as carriers and suppliers increasingly question the company’s solvency and withdraw their support.With what appears to be roughly 12 months of cash on hand, an accelerating burn rate, a complete lack of earnings visibility, and substantial debt and preferred equity, we no longer see any value in the company’s common equity.”

Palm is at the edge of a precipice and needs either a miracle or a very wealthy suitor to save it from what appears to be inevitable self destruction. Anyone with a Pre or Pixi in good condition may want to box that puppy up and put it in a drawer as it may be a collector’s item someday. We’re half kidding. Kind of.

Read (Q3 2010 earnings)

Read (Inventory)

Read (Worthless stock)

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  • Apocalypse

    Palm

    RIP

  • fresh

    how can people complain about sprint.. When sprint is recovering… Makes no sense

  • MSR

    MAKE GSM UNLOCKED VERSION>>>>>DUH

  • bob

    they aint gonna be makin nothin dude… nada.. curtains
    it’s oooooverrrrrrr

  • Fyrfyter

    As is always the case, someone will buy them out. I can see MSFT going for it, because then it would have its own hardware division. One way or another, someone will buy them up, if only to acquire any patents they have on mobile devices. Its the way of the world.

  • NuShrike

    CDMA, boat-anchor of death.

  • Where’s LaToya’s rotten pussy (aka weakness)

    Screw Palm,

    Nobody really care about them.

  • Sarreq Teryx

    I only how google has the good sense to buy them before apple has the same idea. the bull apple is pulling right now needs to end, and this could do it.

  • Patrick Moto Droid

    I went into Verizon and tried out the palm pre plus. it seemed plasticky and toyish (they should have made the screen larger and used heavier or thicker plastic). but what really got me was the OS seemed a little wierd. granted I didn’t spend hours with it, but the way it worked seemed a little bizarre to me. But I do hope that Google or someone other than apple buys/helps them out because it is nice to have options.

    • http://www.maemo-freak.com christexaport

      What state in the US do you live, Patrick Moto Droid? How can a smartphone be bizarre? Compared to what? What experience with smartphones do you have to deem anything bizarre?

      Could it just be that you’re inexperienced, and only relate to the one or two smartphone OSes you’ve become familiar with? Realize there are many ways to complete tasks on various platforms, and rarely are they common in nature.

  • Fired Moto Exec

    Where can I apply for a position? And I dont mean doggy style!

  • Matt

    you don’t get why people complain about sprint, when sprint is recovering? who cares how the stock price is doing… they have terrible phones, abysmal customer service, and the network is junk… good riddence to palm, and hopefully soon to Sprint.

    Posted from BGR Mobile (iPhone).

  • not a journalist

    “devalued to $0″ isn’t accurate at all. ONE analyst guessed that it could go down to $0, which is highly unlikely because someone would likely buy the company before then. To put that as a headline is just wrong.

    I guess you can’t believe everything you read on the internet!

    • Marc

      Someone could buy the company and still leave common shareholders with zero. It’s happened before (think debt and preferred stock).

    • http://www.maemo-freak.com christexaport

      Why would someone buy Palm?? What IP do they have worth the trouble? Maybe RIM wants the app frameworks, but I don’t think any of them are proprietary, so why buy when they could just port Silverlight or Qt instead, which has greater reach?

  • Me

    How did they post Q3 profits if it hasn’t happened yet?

    • Me

      nevermind

  • http://www.maemo-freak.com christexaport

    Now will everyone quit with the “buy Palm” crap!? They suck, ok? They have little intellectual property of note outside of WebOS, which may have a revolutionary UI, but its app runtime support is immature. Palm has no service portfolio either. They don’t have a very good delivery supply chain, nor good carrier relations. So whoever buys them gets nothing but a cool name, not much else. Outside of Blackberry, no one else would benefit from buying Palm. Not Apple, Nokia, Sammy, HTC, Kyocera, or anyone else. Let them die, or innovate and survive.

  • Furious

    Palm is ripe to be purchased. Cisco could definitely use the WebOS on their UC Phones.

  • Peter

    FO BGR

  • http://palfrei.blogspot.com palfrei

    I would have bough a Pre if my carrier had been selling it, I went for the Milestone. I don’t regret my purchase but I wouldn’t have minded a Palm. I used a TX and its callendar management as well as office integration was flawless.

    I’m callendar dependant and the task feature on Android is pitiful compared to the one on the old garnet OS 5 on the TX

  • Derek

    The Palm Pre is actually a pretty good handset with a very solid OS. They need more aps for it. I’d take WebOS over Android any day if they had the same aps available for them.

  • Derrick

    Face PALM!

    It’s sad actually. I was rooting for Palm. I actually got my wife and friends to jump on the Palm Pre bandwagon being an IT professional looking for a good alternative to the iPhone. I found the Palm Pre to be a great alternative.

    But after an extended period of time, I realized there were many OS flaws that Palm was slow to fix. But the biggest downfall was their lack of apps. As time went on and I saw Android blowing up as the second mobile OS of choice, I knew Palm was going down. They were unable to draw a good base of devs to support the platform. I think it would have been a great Blackberry alternative had they worked outs some of the OS kinks, and speed issues (it shouldn’t take 5 minutes to boot up), but an iPhone killer or Droid killer? I think not. In a world where people care more about apps than actually using the phone, Palm was doomed for failure.

    It’s a shame too, that OS in the hands of a company with money would have been killer. I’d love to see Google implement the swiping features and deck of cards task switching once Palm bites the dust.

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