Palm Posts Loss, Announces Stock Offering
by John Paczkowski
Posted on September 17, 2009 at 1:15 PM PT
Perhaps Palm really does have the “special sauce” needed to attain smart phone leadership, as RBC Capital Markets analyst Mike Abramsky recently claimed. Reporting first-quarter results this afternoon, the company posted a narrower-than-expected loss and announced plans for a common-stock offering of 16 million shares.
Excluding charges related to stock options and other items, Palm (PALM) said net losses were $13.6 million, or 10 cents a share, for the recent period. Revenue slipped to $68 million from $366.9 million in the same period last year. Excluding revenue deferred from sales of the company’s new Pre handset, Palm said adjusted revenue would have been $360.7 million. Analysts had expected the company to turn in a loss of 24 cents a share on sales of $291 million.
Palm shipped a total of 823,000 smart phone units during the quarter, up 134 percent over the fourth quarter of fiscal year 2009, but down 30 percent year over year. Smart phone sell-through for the quarter was 810,000 units, up 76 percent from the fourth quarter of fiscal year 2009 and down 21 percent year over year.
Speaking to analysts Thursday afternoon, Palm execs claimed that “the vast majority of new sales” for the quarter were generated by the Pre. But they declined to separate Pre sales from those of other handsets.
Skeptics will no doubt look at this and conclude that Palm didn’t meet expectations for Pre shipments of about 520,000. That, or the company is still selling a hell of a lot of Centros.
“We’re making significant progress with Palm’s transformation, and our culture of innovation is stronger than ever,” said Jon Rubinstein, chairman and chief executive officer. “We’re launching more great Palm webOS products with more carriers, and turning our sights toward growth.”
A few more Jon Rubinstein remarks from the earnings call:
On additional form factors:
I’m a big believer in families of products, and we’ll continue to evolve the line in the future and have a family of products for webOS.
On Carrier Customization:
We don’t really talk about our carrier agreements.
On Pre sales:
Sell-in and sell-through…the vast majority of new sales…relate to the Pre.
On the Pixi cannibalizing Pre sales:
The Pixi is a more cost-effective offering, so yes we expect some people might come into the store looking to buy a Pre and end up with a Pixi. But others might come in looking for a Pixi and end up with a Pre. As I said, we’re big believers in families of products. We’re happy to have two webOS products on the market.
On carrier diversification:
Sprint did a phenomenal launch with the Pre. They invested heavily in advertising….We’re looking forward to launching the Pixi with them as well. We don’t talk about our roadmap, but we’ll have more carriers and more products in the future.
On Motorola’s new Motoblur service:
We don’t really know much about it. To build really great consumer products, you have to own the OS and services. And the fact that we have webOS as our asset is really important.
Comments
Those Pre sales numbers are just ludicrously small.
In 2007, the original iPhone had these disadvantages:
- no 3rd party apps
- no 3G
- no GPS
- no carrier subsidy (!)
- no tethering
- no MMS
- limited Bluetooth
- the touch screen and virtual keyboard were unproven technology
- Apple had never sold a cell phone before
- their carrier partner, Cingular, merged with others to become AT&T in-between the introduction and the launch
Yet 2007 iPhone sales = 5,000,000. All in only 2 quarters.
Now, 2 years later, in the golden age of the smartphone, when you don’t even have to explain to people anymore “why they would want a browser in their phone,” the Pre cannot sell 500,000 per quarter? That is really, really bad. There are no more excuses left for Pre. What a disaster.
You don’t even have to compare to iPhone 3GS. The iPhone 3G continues to outsell the Pre all by itself, even though it is last year’s model.
Posted by Fred Hamranhansenhansen at September 17th, 2009 at 6:52 pmGee, Fred, gush much over your iPhone?
Palm’s quarter was excellent. While others constantly make comparisons to the iPhone, there’s really no need. The Pre can be successful in its own way without dethroning the apparent love of your life. Just as RIM can be successful or the Google phones. The smart phone industry is really just at the beginning.
Quit viewing Palm as some sort of threat to your precious that must be swatted down with drama mama antics.
Posted by Sharon W at September 18th, 2009 at 12:41 amI don’t think Palm expects to survive on current Pre/Pixi sales. I think these phones are demos for WebOS so Palm can get bought. Which is quite possible:
WebOS is certainly way ahead of the moribund WinMo, better than the creaky Blackberry software, better than Symbian, and with a better UI than Android.
The question is who would buy them? Motorola just rolled their own Android solution, Microsoft did nothing with Danger other than killing a competitor, and actually going with WebOS would mean surrendering the browser war to Webkit/Apple. Nokia is already supporting several competing OSes and RIM is afraid of any radical change that might bother their hide bound corporate customers.
So someone in the smartphone arena would have to get a lot more desperate than they are now to buy Palm. WIll Elevation Partners keep pouring cash into Palm long enough for that to happen?
Posted by Ted Todorov at September 18th, 2009 at 5:49 am