No Christmas in Palm-ville
by John Paczkowski
Posted on November 4, 2009 at 12:04 PM PT
With a handful of new Android handsets arriving at market in the coming weeks, including Motorola’s (MOT) much anticipated Droid, Palm’s (PALM) prospects for blowout winter holiday sales are dimming.
Earlier this week, analysts at Citigroup (C) and CL King voiced their concerns about the company in the wake of another ugly quarter from carrier partner Sprint (S). Now Standard & Poor’s is doing so as well. In a note to investors today, analyst James Moorman whacked down his price target on the company’s shares to $10 from $12 and reiterated his “Strong Sell rating.
“We believe the upcoming holiday selling season will be very competitive for handset vendors and think Palm could see competitive pressures,” he wrote. “We believe the small price difference between the Pre handset (especially when on sale at third party vendors) and the new lower-end Pixie could limit Pixie sales and confuse consumers during the launch.”
Indeed. As I noted here last week the $99 price Sprint has set for the Pixi is identical to the Pre’s on Amazon (AMZN). And the Pre has a faster processor, a better screen, and Wi-Fi support as well.
Not the most desirable circumstances for heading into the holiday season.
Comments
Palm started off well, but a warning sign was pretending to be Apple during iTunes synching.
Posted by David Owens at November 4th, 2009 at 12:13 pmThey have never fixed this and it almost seems like they know the end is near, so why bother? I would like to read the future business school master’s thesis on why Palm/Sprint dropped the ball.
Finally Palm’s doubters have something to hang their hats onto, a drop in the meteoric stock price.
Posted by Jim Sceinberg at November 4th, 2009 at 1:26 pmPretty risky, however, to pronounce this company DOA after they just loaded up on over $373 million in cash just a month ago. Palm is stacked with cash for the next three years (the time, BTW, that their ONLY debt comes due).
Followers of this stock should take note of one important thing, Elevation Partners, Palm’s largest shareholder and turnaround partner, just added another 2 million share during that secondary offering at $16.25. There is nothing new in the world today about Palm that wasn’t true in September when it was hitting new highs. Everyone knew that there was a new Android phone coming out from MOT. Everyone knew that Sprint would hold the Palm exclusive through the end of the year before VZ and AT&T get their Palm phones. Believe me; Elevation knows a lot more about the product development cycle at Palm than John Paczkoski or the Citi and S&P analysts. And they continue to be buyers.
We are in the second inning of the Smart Phone game. This space is booming and is big enough for several winners. Palm’s WebOS is still considered a premier operating system by industry insiders. A year from now, Palm will have a fleet of phones spread out amongst all the major carriers. The tired old ‘Sprint Stinks’ story will be a distant memory by then. Those who doubt Palm will still be standing should take a two minute look at their financial condition. THEY WILL BE THERE.
The smart phone phenomenon is a marathon. Only a fool would pronounce the winners after the first few miles. Palm is in this race. They are well trained (deep with engineering talent), have plenty of energy (cash in the bank), and have a proven track record (Ruby built the iMac and iPod). They don’t need to cross the finish line first (and I never said they would) to win plenty of gold. They just need to run a good race and place in the top 3-5, which they will. 5% market share will make this a $10 Billion company in 2012. That’s five bagger folks.
To follow a REAL, in depth analysis with a broader perspective on this stock, follow it on the Broad Street View (Google it). They will be coving it closely for the next several months. If you want to stay short sighted, keep reading this site.
Two things, Jim.
1. I didn’t declare Palm DOA.
2. If I do a WhoIs search on broadstreetview.com will I find that it’s registered under your name?
Posted by John Paczkowski at November 4th, 2009 at 2:04 pmJim,
I agree with everything you have said about Palm with the exception of two things, your comment about John Paczkowski and your comment about the valueless nature of this site.
I disagree with your characterization of this article because I can see that you did not factor into your reasoning, John’s concluding remarks. In your passion to present the case for Palm, you missed the conclusion to John’s article – he was actually arguing in favor of the Palm Pixi smart phone. He was basically telling Sprint that the consumer is being sent a conflicting marketing message about the Palm Pixi by pricing the Palm Pixi at $100 (after a mail-in rebate), the same price as the Palm Pre (which can be purchased at Amazon for $100 without the requirement of a mail-in rebate); though the Palm Pre is a more powerful phone than the Palm Pixi.
I am confident that Palm is a company that will be worth much more than $10 billion in the near future, though I will not use a timeline. John’s articles about Palm have on the whole been quite fair. His articles are quite edgy, and thus provide us with a perspective that is quite refreshing. On the whole he has been objective towards Palm, though at times he expresses his personal views in his commentary; yet those views often present us with an interesting perspective. But those views may sometimes rub one the wrong way, but that is ok; it’s good to know how the man thinks and what his personal convictions are – isn’t that what makes us individuals and thus makes the world an interesting place? If John agrees with everything I thought about Palm, this site will not serve my intellectual needs.
I agree that Sprint should be aggressive, come this holiday season. Instead of offering a $100 main-in rebate for the Palm Pixi, they should offer a $100 instant rebate, plus a $100 mail-in rebate bringing the price to $0 (or $0.99). I believe in this economy, price matters. Sprint, are you listening? Sprint, Sprint!
Posted by Andrew Augustine at November 4th, 2009 at 10:49 pm