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Comments on: PALM Approaching Dollar Stock Status

PALM stockPalm's stock price dropped another 21% today to close at 1.76. It nearly goes without saying that the todays price represents a new all time low. On a day where the Dow closed below 8,000 and the Nasdaq under 1,400, Palm ended the trading day with a $192 million market cap.

Like most other equities in the past couple of months, the stock has seen sharp declines since the current economic crisis emerged. Just over two weeks ago the stock received a double dose of downgrades from financial analysts on account of slowing sales and uncertainty surrounding Palm's long planned turnaround.

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Need some financial analysis here

mikecane @ 11/19/2008 1:42:40 PM # Q
Hey, all you Palm stalkers.

Do us all a favor and crunch the numbers here.

Palm's value before Elevation Partners.

How much Elevation Partners sunk into Palm. What its new value became.

And what's it's become today.

RE: Need some financial analysis here
SeldomVisitor @ 11/19/2008 2:39:54 PM # Q
Palm had $600 million in cash and no debt before.

Palm gave away a boatload of cash to their shareholders (BIG win for all concerned (*)) and ended up AFTER EP gave them $325 million with about $200 million in cash and $400 million in debt.

They currently are burning that cash and are not really paying down that debt. According to their last major SEC filing they have about $167 million in cash with an unknown about in "investments" - we all know how investments have done recently for all of us so their last numbers are undoubtedly way wrong about that particular illiquid bucket of bucks.

If we assume there are about 150,000,000 shares of stock (don't forget EP's special stock when doing your math!) then the STOCK value of Palm is about $300,000,000, plus or minus.

=========

(*) I was floored and totally impressed with the idea of giving away PALM's cash to the shareholders right up front. All along I had expected Palm to simply trickle away their cash as they faded to black. Instead, in one fell swoop (what the heck is a "fell swoop"?) they "used up" that cash WITHOUT letting it get away! Great idea on someone's part.

They are, of course, now trickling away what little cash they had left.

RE: Need some financial analysis here
Gekko @ 11/19/2008 6:20:27 PM # Q
>(*) I was floored and totally impressed with the idea of giving away PALM's cash to the shareholders right up front. All along I had expected Palm to simply trickle away their cash as they faded to black. Instead, in one fell swoop (what the heck is a "fell swoop"?) they "used up" that cash WITHOUT letting it get away! Great idea on someone's part.


yup, another way for Hawkins, Dubinsky et al to milk cash from this puppy tax-advantaged and in one fell swoop.

RE: Need some financial analysis here
mikecane @ 11/20/2008 7:19:57 AM # Q
Is that $167 in cash sufficient to launch ANY Nova device?!

Imagine having to decide *what* hardware to put out with that.

It'd be an ALL-IN bet.

So ask yourself Colligan: Do you feel lucky, punk?

RE: Need some financial analysis here
hkklife @ 11/20/2008 7:39:12 AM # Q
I expect that Palm spent lavishly on the Pro's design and component choices expect it to be the Tungsten E of this year. That is, it'll be the foundation for most of their new products and lead the charge as far as styling cues & formfactor.

Assuming Palm hangs around long enough, we could theoretically see within the next 6-12 months a Pro-esqu, slightly downsized, cost-reduced Centro Pro running Garnet, a beefed-up version of the Pro running Nova (hah!), and then the existing GSM Pro and the imminent CDMA Pro.

Regardless, Palm's still terrified to move beyong the front-facing QWERRTY + 320x320 Small Square Screen format. So they'll just try to beef up the specs around those mainstays while making the devices better build and sleeker.

I would NOT put it past Palm to come out with an ultra-in Pro variant with, say, a 3" 320x320 square screen with a sad tagline along the lines of: "The New Treo Pro2. Large touchscreen. Ultra thin. Simple to use. Simply Palm"



Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Need some financial analysis here
AdamaDBrown @ 11/20/2008 9:00:24 AM # Q
Mike, to answer your question, Palm's market cap prior to the Elevation Partners deal was about $1.8 billion dollars.

Elevation Partners invested $325 million in Palm. The new value after they sent just under a billion dollars out the door in dividends was around $900 million.

As of right now Palm's total worth is about $246 million, up from $190 million at the start of trading today.

This is all based off Google Finance's numbers, in case anyone was wondering.

RE: Need some financial analysis here
SeldomVisitor @ 11/20/2008 9:24:45 AM # Q
> ...As of right now Palm's total worth is about $246 million, up
> from $190 million at the start of trading today...

Apparently there was a "key technical indicator" hit this morning - the S&P hitting a certain low point - that caused both massive "save butt just in case" short covering and massive buying, too, across the Market, not just with PALM. If you check out today's charts for the Indicies (Dow, NAZ, S&P) and a bunch of stocks, you'll see the correlation.

PALM, of course, is an exuberant stock that often moves radically MORE than the Market.

Too bad - when I saw the exuberance begin I thought (and expressed elsewhere) that maybe some Colligan news had happened...giggle. But it turned out to be Marketwide and based of the Phoopiest of Poo - TA.


RE: Need some financial analysis here
AdamaDBrown @ 11/20/2008 9:49:34 AM # Q
Yeah, and then tomorrow the S&P goes down again. :P My faith in the "key technical indicators," "floor levels," and other things is about as strong as a wet paper towel.

RE: Need some financial analysis here
Gekko @ 11/20/2008 9:52:07 AM # Q

$200M. perhaps we should all pitch in $20 and buy the damn thing?

RE: Need some financial analysis here
joad @ 11/20/2008 10:49:21 AM # Q
No thanks. I've bought enough Palm already.


Paying my annual PDA update tax to Palm since 1997.
RE: Need some financial analysis here
mikecane @ 11/20/2008 3:47:23 PM # Q
So let me repeat my question.

Does Palm have sufficient capital to really push out even ONE NOVA-based device?

We've seen their damned hardware design skillz with the latest Centro and Treos. Injecting Nova into those isn't going to be anything but lipstick on a Palin.

RE: Need some financial analysis here
AdamaDBrown @ 11/20/2008 8:53:16 PM # Q
There's insufficient data to answer that properly, Mike, but I can give you some semi-informed speculation. Palm had about $167 million in cash and equivalents at the end of August. They're expected to lose another $20 million this quarter if the analyst expectations hold. Frankly I think that's optimistic, but we'll go with that number.

That gives them $147 million going into next quarter, starting December 1st. Here's where things get tricky. We have no idea how good or bad the holiday shopping season will be to Palm. All indications are that it's going to be very bad for retailers in general. Something as relatively esoteric as smartphones could see an even bigger drop, or sales could simply flatline.

The reality is that Palm could come out of the holiday season with anywhere between $150 and $100 million dollars in the bank.

Now how much does it cost to launch a new device? That depends on a ton of factors. How much are they going to subcontract? How much R&D still needs to be done to get the new and as yet completely unseen OS working and running on hardware? Are they going to try to clone an existing device or build a new one? How much retooling will have to be done? How much testing? What concessions will they have to make to the carriers to get it launched?

In short, it's impossible to answer exactly what Palm needs to launch a device. Even if we knew how much it had cost them to launch previous devices, this could be entirely different. But I certainly don't think it'll be cheaper than launching one of their other phones.

At this point, Palm has maybe a year's cash supply left if they're careful, and sales don't take a further downturn.

RE: Need some financial analysis here
SeldomVisitor @ 11/21/2008 5:10:51 AM # Q
> ...if they're careful, and sales don't take a further downturn.

They seem to be careful - nee the layoff rumor - but I believe sales took a MASSIVE hit in the current quarter and PROBABLY for the next quarter. According to Palm's last earnings call, the Centro sales are "maturing"..."fell off the cliff" to the rest of us...Those sales, of course, are not to consumers but to those who sell to consumers. And we already know about the lack of sales of the Treo Pro and the Treo 800w, one essentially ZERO, the other perhaps noise level.

The current quarter ends in a week or so...it'll be interesting if Palm has anything to say about it by then (instead of waiting for the earnings call). Material changes HAVE to be mentioned when known (even though Palm didn't give very firm guidance).

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Is EP coming to the rescue!

palmit @ 11/19/2008 1:51:21 PM # Q
I wonder if its time for Elevation Partners to get there wallets out again!

RE: Is EP coming to the rescue!
hkklife @ 11/19/2008 2:01:28 PM # Q
No HTC is gonna come to the rescue & snatch up the remnants of Palm for pennies on the dollar.

Just think of it.... "HTC Centro" has a nice ring to it for the low-cost sector.

Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Is EP coming to the rescue!
SeldomVisitor @ 11/19/2008 2:40:43 PM # Q
I doubt anyone of sufficient size to do so would be DUHmb enough to try to rescue Palm.

RE: Is EP coming to the rescue!
hkklife @ 11/19/2008 4:37:09 PM # Q
I didn't specifically say "to the rescue".

I mean that someone would swoop in like a vulture when the smoke has cleared and pick up Palm's few remaining attractive pieces of IP. There's still a smidged of brand equity in the "Palm" name (think of how many people still call tablets/PDAs/smartphones/handheld devices "Palm Pilots", a good dozen years after that product was launched!). The carrier agreements Palm has in place are worth *SOMETHING*, as is the perpetual license to Garnet and, ummmmmm, that warehouse full of unsold pink Centro cases.

Even the "Treo" and "Centro" brands have some remaining (though diminishing daily) cachet. Look how a whole slew of "gone but not forgotten" brands live on as "me too" rebrands: Zenith, Magnavox (and now even Philips on TVs), Westinghouse, Sylvania, Polaroid, Emerson, Bell & Howell, RCA, GE, Commodore, Coleco, Atari, etc etc etc.

"Palm", "Treo" and "Centro" can chug along perpetually as long as there's someone willing to pay for a bit of licensing and/or to support those as sub-brands.

Now, Palm Inc. as far as a ongoing, autonomous corporate entity....I give 'em 9-12 months, tops.

Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Is EP coming to the rescue!
Gekko @ 11/19/2008 6:23:13 PM # Q

PALM
Mkt Cap: 193.18M



RE: Is EP coming to the rescue!
mikecane @ 11/20/2008 7:18:28 AM # Q
>>>think of how many people still call tablets/PDAs/smartphones/handheld devices "Palm Pilots", a good dozen years after that product was launched

True story that I might have related here months ago.

Ferry coming into dock. I see a twenty-something with her red Centro in her hand.

Teenager: I like your phone. Is that a Blackberry?

Twenty-something: No. It's - (pause as she tries to recall the name) - it's a Palm Pilot!

Talk about a brand having a lasting impression!

RE: Is EP coming to the rescue!
Gekko @ 11/20/2008 7:43:10 AM # Q

somebody keep him away from small animals and little children.


RE: Is EP coming to the rescue!
PacManFoo @ 11/20/2008 8:29:43 AM # Q
Palm Pilot, that's a pen right?

The last known classic PDA user.
I've recently upgraded from a PLAM TX to a Newton MP2000!
http://newtonpda.googlepages.com
RE: Is EP coming to the rescue!
hkklife @ 11/20/2008 9:42:43 AM # Q
>>Ferry coming into dock. I see a twenty-something with her red Centro in her hand.
>>Teenager: I like your phone. Is that a Blackberry?
>>Twenty-something: No. It's - (pause as she tries to recall the name) - it's a Palm >>Pilot!
>>Talk about a brand having a lasting impression!


Happens to me all the time. Just a few weeks ago I was meeting with a finance guy and he whipped out a late-model HP iPaq: "Holy on, let me check my calendar for next month on my Palm Pilot". Wrong product line, wrong OS, wrong company!

Also recently, I took out my 755p. The lady next to me said "What on earth IS that thing with all those buttons on it?"

Me: "It's a Smartphone. A Treo"

Them: "So it's a BlackBerry? Do you like it"

Me: "No, it's a Treo, not a Blackberry. Yes I like it. I've used one for years"

Then: "Oh, so it's one of those old Palm Pilots. They don't make 'em anymore. Well, as long as it suits your needs keep on using it!"


Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Is EP coming to the rescue!
Gekko @ 11/20/2008 9:45:52 AM # Q

yup, she probably saw you fumbling with two devices and was wondering WTF?

RE: Is EP coming to the rescue!
joad @ 11/20/2008 10:55:18 AM # Q
I notice that "Blackberry" is basically the generic term for smartphones that look like the Treo. More often than not, people call my Treo a Blackberry.

If people are referring to PDAs generically as "PalmPilots," and Palm hasn't released a new PDA in years.... They now seem to be making "knockoff Blackberries."


And yes, "PalmPilot" is really a pen. Thankfully, Pilot Pens got their pound of flesh years ago so we wouldn't be confused...


Paying my annual PDA update tax to Palm since 1997.

RE: Is EP coming to the rescue!
mikecane @ 11/20/2008 3:45:15 PM # Q
>>>somebody keep him away from small animals and little children.

Aw, Gekko, what would I be left for mealtimes?!

Reply to this comment

Palm are screwed

just_little_me @ 11/20/2008 6:54:31 PM # Q
As a long time fan of Palm, today I write them off. I just heard that over 200 people have been sacked - most from the US, but apparently they are closing offices in other regions (Asia? Europe?). Even if Nova is the best thing since sliced bread (which seriously isn't that great!) they are still is a world of hurt.

Sad sad days - especially for the poor staff who get to start job-hunting 5 weeks out from Xmas... :-(


JLM.

RE: Palm are screwed
hkklife @ 11/20/2008 8:03:55 PM # Q
Palm cares about their staff about as much as they care about the company's well-being and their remaining loyal customers ( that is to say, not at all).

JLM, when you say closing offices in Asia/Europe, do you mean closing up shop ENTIRELY in those markets or just scaling way back?

There WILL be no Nova. There never WERE plans to release Nova. It was just a carrot to dangle in front of their employees/partners/developers/customers/media/analysts in order to give the illusion that *something* fantastic was being cooked up in the Palm Skunkworks lab...but in reality, not much was happening other than the continued plundering of the company coffers while trying to keep it afloat as long as possible with smoke & mirrors while looking for an 11th-hour savior.



Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Palm are screwed
mikecane @ 11/21/2008 8:08:45 AM # Q
If there is no Nova, Ed Colligan can look forward to lawsuits and jail time. He PUBLICLY STATED there was a new OS to analysts. That's fraud and misrepresentation.

RE: Palm are screwed
SeldomVisitor @ 11/21/2008 8:22:54 AM # Q
Colligan only has to do what that PalmSource guy (the name of whom escapes me) did. Predict Cobalt out by end of year, release a CD containing Cobalt on December 31st.

Done.

Doesn't matter if it is complete or anything else - including does not matter if it even HAS a User Interface. T"The platform" is released by "end of year".

RE: Palm are screwed
Gekko @ 11/21/2008 9:30:46 AM # Q

sheesh! JLM throws in the towel now too???

RE: Palm are screwed
hkklife @ 11/21/2008 11:51:39 AM # Q
SV;
You are thinking of David Nagel, formerly of PalmSource.

http://www.youtube.com/watch?v=FPipGn7JmMM

For amusement purposes only, here's a revised respost of what I posted to TC a few weeks ago:

My predicted Palm timeline:

1. The refreshed Sprint Centro (128mb, soft touch paint etc) is released to little fanfore. This is followed by mass layoffs and a disasterous earnings report conference call on Dec 18th. Numerous vague Nova promises are made and Ed C. promised a demo of the latest Nova build "soon" and that it will be "spectacular".

2. December/early Jan--The 128mgb Centro arrives in black at Sprint stores. The Treo Pro is still a no-show on any domestic carrier and its unlocked price is quickly slashed by $100 (or more). AT&T officially EOLs all Palm products save the Centro.

3. January-Treo 800w finally appears on Verizon's B2B site as "coming soon" but is immediately pulled and is never seen again. Palm's remaining handhelds are finally EOL'd and Ed C. makes a big hoopla about Palm taking the bold next step to a smartphone-centric product lineup. Ed C. again promises a Nova demo "very soon". Ed C mention that consumer-oriented social networking has been targeted as THE killer app for Palm going forward.

4. Feb/early March-Palm rolls out the 128mb Centro to Verizon & other CDMA carriers and possibly releases a refreshed GSM Centro too. Palm remains mum on Nova aside from promising a demo "Very, very soon". Palm slashes MSRPs for all of their remaining products across the board and weekly inventory blowout sales start happening at the palm.com store.

5. March-CDMA Treo Pro finally appears on Sprint. It's terribly overpriced relative to comparable handsets from HTC etc. and experiences a shockingly high number of intitial returns.

6. May-Nova is finally demo'd as a short, grainy YouTube video on the official Palm blog. Nova's release is still promised as 1H '09. More layoffs at Palm. The remaining worldwide offices are quietly shuttered. The Centro's MSRP is slashed down even further and all kinds of new colors and "buy 1, get 1 for a friend" promotions appear to stimulate Centro sales.

7 June 30 2009. Nova is briefly demo'd again via another grainy YouTube video on the Palm Blog and the first hardware running Nova is promised "soon". Ed C. explains in a very complicated way that just becuase the new OS is "ready", the hardware to run it is "not ready" due to some "very special engineering requirements". The release date for the first Nova device is revised to "late summer" (the same timeframe as the Foleo's promised launch in 2007).

8. Late summer 2009: Palm announces a strategic respositioning of Garnet for ultra-low end consumer-oriented devices focusing on social networking. Nova is again demo'd via a YouTube video on the Palm blog. In a cryptic post on the Palm blog, Nova's release date is reivsed to late October due to the "current sensitivity of global financial markets".

9. Oct-Treo Pro arrives for Verizon but after a few days on the market, the handsets are quickly & quietly recalled for unidentified reasons. Chatter begins anew that Palm is about to file chapter 11.

10. Nov '09. Palm files chapter 11 and begins to explore "strategic alternatives". All domestic carriers have by now dumped Palm's products except for Sprint, who themselves are experiencing dire problems.

11. Dec '09 Palm's IP is acquired for pennies on the dollar by HTC and the rest of the company's assets are sold off piecemeal. Ed C. goes to work for Numenta. Rubinstein goes back to Apple to work on their new top-secret tablet project.


Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Palm are screwed
SeldomVisitor @ 11/21/2008 12:46:34 PM # Q
> SV;
> You are thinking of David Nagel, formerly of PalmSource...

Yeah...everytime I tried to remember his name "Nyquist" kept popping into my head! Lol!

Reply to this comment

Dollar Stock?

LiveFaith @ 11/20/2008 7:23:43 PM # Q
Ryan, that's some strong P.C. there. :-D
It's only a dollar stock if it can hold all sellers from giving another 1/32. Once they do, it's then a Penny stock. Ugggh.

But hey, this company is a value play. They once owned > 2/3 of the handheld market and have two top 50 electronic inventions, basically established the smartphone segment, have dozens of international carrier agreements and strong retail channels, a new platform ready to shake the foundations, and breakthrough devices deep in the development funnel ready to run it. Once she drops into the sub $.10 range, I'm gonna load the wagon for a sure thang!!!

Pat Horne

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