Palm Wouldn’t Have Lasted the Year
No doubt about it. Hewlett-Packard’s (HPQ) hurried acquisition of Palm (PALM) Wednesday saved the company from near-certain bankruptcy.
With dwindling capital and a nasty cash burn rate, Palm’s financial deterioration over the past year has been precipitous. And in the past few months, it has only accelerated, as this 8K filed with the SEC yesterday it makes clear:
Palm, Inc. (“Palm” or the “Company”) is updating its guidance for the fourth quarter of fiscal year 2010. The Company expects revenues for its fourth fiscal quarter to be in the range of approximately $90 million to $100 million … Revenues for the fourth fiscal quarter are being impacted by slow sales of the Company’s products, which has resulted in low order volumes from carriers. Palm also expects to close its fourth fiscal quarter with a cash, cash equivalents and short-term investments balance between $350 million and $400 million.
When Palm reported third quarter earnings in March it said it had some $591 million in cash and equivalents. In the 8K above, it says it expects them to have dwindled to between $350 million and $400 million by the close of the fourth quarter (the middle of the calendar year). That’s a cash burn of $191 million to $241 million for the period.
At that rate, Palm would have run out of money before the end of the year.