Palm: You Thought Q2 Was Bad? Get a Load of Q3.
by John Paczkowski
Posted on March 3, 2009 at 3:48 PM PT
The debut of the Palm Pre can’t come soon enough for the long-suffering handset maker. Palm (PALM) reported preliminary results for its third quarter after market close Tuesday, and they were ugly, to say the least. The company says Q3 revenue will top out at between $85 million and $90 million. That’s down more than 70 percent from the same period last year, and substantially less than $157.7 million Wall Street had been expecting. Worse, the company is facing a quickly tightening cash supply. Palm burned through between $95 million and $100 million during the quarter, making quick work of the investment Elevation Partners made in it last December. Now it’s only got between $215 million and $220 million left.
In a statement, Palm blamed the drop on declining demand for its “maturing legacy smartphone products” and the souring economy. And the company is clearly banking heavily on the Pre to turn its sullied fortunes around. “The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we’ve got a difficult transition period to work through,” said CEO Ed Colligan. “Despite the challenging market environment, the extraordinary response to the Palm Pre and the new Palm webOS reaffirms our confidence in our long-term prospects and our ability to reestablish Palm as the leading innovator in the growing smartphone market.”
Comments
This was blatantly obvious, why would anyone buy a legacy Palm product when they know of the impending Palm Pre? Ironically the coming Pre is partially responsible for their disappointing quarter. What a great opportunity to pick up Palm shares at a discount! Dollar cost averaging is the way to go.
Posted by darius arya at March 3rd, 2009 at 9:37 pmhow the mighty have fallen…
I remember a time when Palm was THE must have item, look where their management team have taken them.
tragic, simply tragic.
Posted by mike diaz at March 4th, 2009 at 3:30 am