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

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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