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Palm Q3 FY08 Conference Call Highlights

Palm IncPalm Inc announced its third consecutive quarterly loss today. The company posted a $31.5 million dollar loss despite an all time record in smartphone sell-through. The success of the Palm Centro drove an increased number of smartphone shipments but its lower average selling price did little to help Palm's bottom line.

In the quarterly conference call, Palm CEO Ed Colligan remarked it was a tough quarter for the company but then went into his usual upbeat and optimistic look ahead as he briefed analysts and investors on the companies long term prospects. Read on for the full highlights.

Colligan started of the call stating it was a tough quarter for Palm and that they still had a lot of work ahead of them. Colligan cited the declines in the handheld business, Palm's aging Windows Mobile product line and the lower than average selling price of the Centro for the revenue shortfall. He also remarked that the Treo 500v has not sold as well in Europe as they'd like.

Centro Stregnth
The Palm Centro was again a big bright spot for the company as it drove an all time high of 826,000 smartphone units shipped. The Centro is currently riding a wave of increasing sales of over 30k units per week, and is trending up in contrast to the usual smartphone sales track for Palm. The Centro is also bringing in new customers for Palm as its own early buyer study has shown that more than 70% of Centro buyers were "traditional" cell phone users. Twice as many Centro buyers than Treo buyers were under 35 and 95% of them have signed up for a data plan.

New Windows Mobile Products
Palm Smartphone Sell ThroughDuring the call Colligan made several references to its aging Windows Mobile line and announced that they would refresh the WM product line before the end of summer. He gave little specific details but did confirm it would be targeted at enterprise customers and would be keyboard based. He also confirmed it would be announced as a new Treo and said it would include Microsoft's latest offerings. He later remarked in the Q&A session that he felt it would be the "most competitive enterprise solution on the market."

As expected Palm exec's are tight lipped on specific details at this time, however the rumor-mill has been pretty active around the new Windows Mobile products. A recent report cited a device code-named the "Palm Drucker" sporting a 320x320 touchscreen, Windows Mobile 6.1 Professional and WiFi and GPS capabilities. A possible image of this same device was even included in the background of Bill Gate's recent CES keynote speech and presentation.

Palm Systems Software Update (aka Nova)
Colligan said the company is ahead of schedule in certain regards to their post recapitalization transformation. He also gave an update on the progress of the next generation operating system. He is standing by his earlier stated targets of a general announcement before years end and new products based on it debuting sometime in early 2009. He said the company is meeting its major milestones and in general they are "on track" on development.

During the quarter Palm's revenue mix was 88% smartphones and 12% handhelds. 82% of revenue came from the US, while 18% was International. Smartphone revenue was $275.4 million. Smartphone shipments were at 826k, up from 686k, 689k in the previous two quarters. Smartphone sell-through was at 833k units with a $331 per unit average selling price.

Handheld revenue for the quarter was $36.7 million. 198,000 units were shipped for a 38% year over year decline. Handheld sell-through was 282k units down from 323k the previous quarter. Palm executives gave no mention of addressing the declining handheld market or refreshing the existing product line.

Although Palm has decided not to provide guidance for future quarters while it focuses on its long term prospects, Colligan did see the first half of FY09 (calendar July 2008 and on) as a turning point on the road back to profitability. He stated that by then continuing Centro sales combined with the push for more higher end Treo's powered by the new Windows Mobile products will drive growth and demand in future quarters.

The following audio clip is from Colligan's opening remarks about the progress and work on the next generation operating system.

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The Centro giveth and the Centro taketh

hkklife @ 3/20/2008 7:39:41 PM # Q
Of course Palm's new products are keyboard-based! Do we REALLY expect anything else other than SSS (small square screens) from them? Of course we don't!

As far as Colligan's complaints (declines in the handheld business, Palm's aging Windows Mobile product line & the lower than average selling price of the Centro), ALL of that is their fault.

#1 Had Palm not totally abandoned the handheld market in a fenzy of greed to cozy up to the carriers (namely Sprint & Verizon) they'd still be treading water, even if they had kept tweaking the same 3 (or even 2) existing PDA formfactors/price points.

#2 Aging WM line? Again, entirely Palm's fault. To not be the first company out of the gates with a 320x320 WM6 smartphone is just absurd. The 755p formfactor would have made for an ideal first WM6 device. Oh, what's that you say? The carriers didn't comission a 320x320 WM6 CDMA Treo from Palm? Oh well, that's what you get by selling your soul to the carriers and then repeatedly bungling one release after another.

#3 Lower than average selling price of the Centro? Again, entirely Palm's fault. Had they not tried to sell the SAME smartphone 3x in a row (Treo 700p, 755p, Centro) perhaps they could have commanded a higher price. Or even (GASP!) tried to introduce SOME compelling new hardware feature on the Centro to make it worthy of a higher price (128mb RAM, 2mp camera, 2/4gb internal flash screen are all perfectly functional under Garnet). Heck, a 3.5mm stereo headphone jack would have given the Centro SOMETHING that the other Treos do not have. Instead, that pitiful stock battery and tiny scren & keyboard aren't worthy of a premium pricetag and everyone (including the carriers) knows it.

#4. Oh, and the Treo 500 not selling well in Europe? That's Palm's fault for comissioning a "me too" device that isn't even quad-band so it can be sold in the US. Quite foolish if you ask me. Heck, had Palm just had a quiet 500v launch in the US and sold it through AT&T as a WM version of the Centro (or, as a Moto Q competitor) or even just unlocked on their website it'd at least have gotten SOME attention. And an utter lack of differentiating features over every other WM phone on the market doesn't help matters either.

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

RE: The Centro giveth and the Centro taketh
Gekko @ 3/20/2008 7:52:00 PM # Q
>Had they not tried to sell the SAME smartphone 3x in a row (Treo 700p, 755p, Centro) perhaps they could have commanded a higher price.

they were hoping you didn't notice!

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Pathetic Palm Blows Another Quarter

Gekko @ 3/20/2008 8:46:48 PM # Q

ouch.


Pathetic Palm Blows Another Quarter
Dan Frommer | March 20, 2008 4:30 PM

Has-been smartphone maker Palm is having some luck selling its cheap, tiny Centro smartphone at Sprint (S) and AT&T (T): It helped the company sell a record 833,000 phones last quarter, up 13% year-over-year.

But business still stinks: The company swung to a loss and missed the Street's sales and EPS projections. Palm (PALM) shares are down 6% in after-hours trading - at $4.45, they're just 20 cents above their 52-week low.

Palm (PALM) posted $312.1 million of sales, down 24% year-over-year and missing the Street's $315.3 million consensus. Adjusted EPS came in at a 16 cents per share loss, below the Street's expected 15 cents per share loss. And the company reported a $31.5 million net loss, a huge drop from its $11.8 million Q3 profit a year ago.

http://www.alleyinsider.com/2008/3/palm_q3_swings_to_loss_misses_on_sales_eps

RE: Pathetic Palm Blows Another Quarter
theog @ 3/20/2008 10:43:10 PM # Q
I'm not surprised by palm or your subject line. :-)

Yes, everything is bad at palm right now... it blows. lol

Vote for John Kerry... best man for the job.

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To Little To Late for Me

mopcodes @ 3/20/2008 11:39:02 PM # Q
It's a travesty what's happened with Palm overall. My Treo 755p is my last. It's been the worst Treo I've ever owned. Consistently freezing. Locking up, etc. Today there was an update posted for Resco's File Explorer 2008 today - well I found it today it might have been out longer than that. It's the first upgrade for any Palm app that I don't plan on buying. I'm bailing out and at this point will ONLY buy something for this phone is I absolutely need to have it. Period. I'm hoping the next iPhone will be a good choice, but hate to leave Sprint. However it's all about the handset and whether it works or not and this #$#$# Treo just does not work well.

D. Martin
Former Amiga/Commodore Author/Writer/Reviewer
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Verizon Centro

RLFox124 @ 3/21/2008 12:28:11 PM # Q
I was hoping they would announce that they expected Centro sales to continue growing because other cellular providers like Verizon are scheduled to offer it in the next quarter :(

RE: Verizon Centro
hkklife @ 3/21/2008 1:52:55 PM # Q
I honestly don't expect Verizon to offer the Centro. I bet the 755p is the final Palm OS product we'll see (Garnet, Nova or otherwise) from them.

I would not be STUNNED to see a T-Mobile Centro, if for no other reason than it's popular, it's cheap, it's GSM and it would diversify their lineup. I think that the comments about adding new carriers is probably for more global carriers for the GSM Centro, though we canot rule out Telus in Canada, Lusacell in Mexico, or maybe someone smaller like Alltel in the US for the CDMA version as well.



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

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PDA Info Center

Tuckermaclain @ 3/21/2008 6:03:50 PM # Q
I had to return my 650 because of frustrating hard resets right out of the box. Is the Centro stable? BTW, since Palm is spinning down perhaps PIC needs to start transitioning into a larger line of subject matter. "PDA Info Center" with less focus on Palm. Do some good reviews on the coolest, bestest phones/PDAs-whatever the OS. Otherwise PIC will soon become only of historical interest. Nobody (IMO) reads it as much as they used to.

RE: PDA Info Center
Rastick @ 3/22/2008 12:29:04 AM # Q
Centro appears to be Palm's most stable phone and a significant improvement on the 650.
RE: PDA Info Center
rpa @ 3/22/2008 10:45:58 AM # Q
I bought an unlocked GSM Centro from a UK based internet shop for about $300. After a few weeks of use, I have retired my T|E and use the Centro exclusively. No problems to report: great call quality, Palm O/S ease of use and a decent camera. The small qwerty is fine and the smaller screen is OK as it is very sharp.

One aspect that is new on the Centro vs my T|E is the calendar function enabling a timezone to be associated with an event, "no timezone" being the default. This was a MAJOR problem I had with my last Nokia phone as the calendar entries all shifted when changing timezones to the time relative to the new timezone. Having the choice of setting the timezone (or not) for an event is great and all smart phones should be like this (anyone at Symbian listening?).

One complaint: the SIM card is hard to remove without using a tweezer....slips in easily but getting it out is tough. I feel this is a minor design error that Palm designers should catch on the next model.

rpa
Palm Pilot >> Palm Vx >> Tungsten E >> GSM Centro

RE: PDA Info Center
hkklife @ 3/22/2008 1:04:58 PM # Q
Sadly enough, there's not likely to be a "next model" (at least a GSM one designed in-house by Palm running any flavor of the Palm OS).



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

RE: PDA Info Center
Rastick @ 3/22/2008 5:29:49 PM # Q
Don't use tweezers, use the butt end of the stylus. It is a good recommendation for pushing in the micro SD card and for applying the pressure to get it out.
RE: PDA Info Center
bhartman34 @ 3/24/2008 11:37:08 PM # Q
I've got a Centro, and I've had no major problems after my first day of use. (My first day, I had to diagnose some programs that synced over from my TX, but were making the Centro crash. Basically, I just had to remove the Saved Preferences and everything was golden.)

The only (minor) complaint I have about the Centro is that answering a call hasn't been as intuitive as I'd like. There have been times I was using the PDA function of the phone, it rings, and I've tried to use the touchscreen to answer the call, but I had to use the center button instead. Like I said, it's a minor complaint, but I'd hope they would put out a fix for it to let you use either one.

I think the Centro could still end up bolstering Palm's bottom line, too. If the Centro is adopted by enough carriers, it could make up for its lower cost. (How many people do you think buy feature phones as opposed to smartphones?) And of course, if they accessorize the hell out of it, they could start to reap the benefits of that, too.

As far as I can tell, they only benefit by putting the Palm OS in more people's hands. The more people using the Palm OS, the better your chances of getting customers for higher-end models later. (It's a lot easier to convince someone to get a Treo for several hundred dollars after they've had a good experience with a Centro but are ready to step up.)

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No NOVA Phones until 2009?

Gekko @ 3/23/2008 1:02:37 PM # Q

wow - i just caught that. December 2009?

RE: No NOVA Phones until 2009?
TooMuch @ 3/23/2008 4:04:38 PM # Q
I missed the "December" 2009. Where does it say "December?"

RE: No NOVA Phones until 2009?
TooMuch @ 3/23/2008 4:33:50 PM # Q
It is only natural that the process reveals the OS before hardware. They have to demonstrate to the carriers that the OS is viable. So, why not show it off to everyone at the same time. It's good PR. If the buying community likes it too, it only adds leverage to Palm with carriers.

Thus, we should see the OS in late fall followed by the hardware in early 2009. That's pretty much what we have been hearing since Oct. 07.

RE: No NOVA Phones until 2009?
PacManFoo @ 3/23/2008 7:31:17 PM # Q
That's assuming you actually see the OS! -cough- Colbalt -cough-


PDA's Past and Present:
Palm TX (Number 2)
Palm - IIIxe, Vx, M500, M505, Tungsten T, TX
Handspring - Edge, Platinum, Deluxe
Sony - SJ22, UX50
Casio-EM500
Apple - MP110, MP2000, MP2100

RE: No NOVA Phones until 2009?
TooMuch @ 3/23/2008 9:22:46 PM # Q
;) noted

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OT: RIM sales and profits double

Gekko @ 4/2/2008 5:21:38 PM # Q

Research in Motion's sales and profits double
Results for the maker of the BlackBerry beat Wall Street's expectations and company raises guidance; stock spikes after-hours.

April 2, 2008: 4:29 PM EDT

NEW YORK (CNNMoney.com) - Research and Motion, the maker of the popular BlackBerry wireless device, said fourth-quarter profits and sales both doubled over the same quarter last year, thanks to strong gains in subscribers.

http://money.cnn.com/2008/04/02/news/companies/Research_earnings/index.htm?postversion=2008040216


RE: OT: RIM sales and profits double
SeldomVisitor @ 4/2/2008 5:54:25 PM # Q
And their superlative (above estimates) guidance for the next earnings does NOT take into account any new devices.

And they're working on new devices.

Yow.


RE: OT: RIM sales and profits double
hkklife @ 4/2/2008 7:33:34 PM # Q
Amen. New DEVICES. Not new COLORS, new DEVICES. And specifically, devices designed to suit their OS/customers, not lame "me too" rebranded efforts.



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

RE: OT: RIM sales and profits double
SeldomVisitor @ 4/2/2008 8:09:26 PM # Q
And that CEO also said JUST prior to end of call that "Seamless integration with ALL information on a PC" is "imminent"!!

And their guidance does NOT depend on whatever THAT is!

They're really producing...nuff said.

OT: iPhone Shortage
Gekko @ 4/2/2008 8:34:30 PM # Q

Steve Dowling from Apple called back. "We are working to replenish iPhone supplies as quickly as we can," he said to me reading the same statement he offered to others. "Our stores continue to receive shipments almost every day."

http://bits.blogs.nytimes.com/2008/04/02/the-iphone-shortage/?em&ex=1207281600&en=1a9d03e0d3257394&ei=5087%0A



RE: OT: RIM sales and profits double
AdamaDBrown @ 4/2/2008 9:46:41 PM # Q
The thing about RIM is that they're basically immune to commoditization. Besides the fact that a lot of businesses buy them off-contract, no matter how cheaply their devices get sold by carriers, they still make their money on services. They could give their devices away in a box of cereal, and still have revenue coming out their ears.

RE: OT: RIM sales and profits double
Gekko @ 4/2/2008 10:21:32 PM # Q

true. see my lou gerstner quotes on commoditization/services.

did palm have a chance with services but blew it? remember their focus on web clipping way back in the days of the palm vii? could they have focused on a push email package instead and been a viable competitor to RIM today had they recognized its importance? perhaps they could have bought GOOD-LINK cheap way back then with their inflated 2000 stock price and improved/integrated it into their offering?

easy for me to say - hindsight is 20/20.

RE: OT: RIM sales and profits double
Gekko @ 4/2/2008 10:30:37 PM # Q

however, commoditization is no threat to the iphone. why? because they built a better/unique mousetrap rather than just continually rehash old stale ideas.

of course palm did bring us the fooleo.

RE: OT: RIM sales and profits double
hkklife @ 4/2/2008 10:35:20 PM # Q
Y'know, Adama brings up a good point:

About 6-12 months ago, someone here (SeldomVisitor, I believe) chimed in with me in thinking that Palm was going to start heavily pushing "services" of all sorts.
I believe Andy Brown might have even hinted at that at some point last year (Palm's Analyst Day, perhaps?). Has anything been said/printed/speculated/hinted at from Palm in that regard in the last few months?


Yup, RIM's growing presence in the consumer world should really make Palm scared. Apple & the iPhone are more of a separate "prosumer + hipster" entity than RIM's handsets so I figure they're immune to the BB phenomena. But Palm's products, with their increasingly diminuitive keyboards & screens and ho-hum feature set, are really going to feel the heat from both current & upcoming BB releases.

P.S. Anyone know off-hand if RIM has yet released a single BB model with all of the "must have" features: 3G data, 3.5mm stereo headphone jack, wi-fi, & GPS?
I know T-Mobile's Curve has trades wi-fi for GPS & is limited to EDGE while the EVDO Sprint & Verizon 8830's don't have wi-fi.

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

RE: OT: RIM sales and profits double
Gekko @ 4/2/2008 10:47:46 PM # Q
RE: OT: RIM sales and profits double
hkklife @ 4/2/2008 10:50:38 PM # Q
Good hindsight, Gek.

I think, quite honestly, that Palm WAS still bumping along withing shouting distance of success circa 2002/2003. They just got cheap/arrogant/distracted by the Palm/Palmsource split and determined it would be easier to hide behind marketing smoke'n mirrors than it would be to keep innovating.

The Tungsten W was a pretty decent offering (for the time). It was just crippled by its OS & CPU. But Palm was on the right track....a great screen (for the time) QWERTY data-centric device.

Palm should've focused on two types of wireless devices post-Handspring acquisition: modestly spec'd small smartphones (Treo 600/Centro style) AND larger, data-centric PDA replacements that placed telephone functions secondary (if they even had them at all). Think the Tungsten C but offered in both wi-fi and cellular versions (look at what Handspring was doing with the Treo 180 and the 90, for example). That would have nicely set the stage for a circa 2005/2006 Treo TX-type device w/ a large screen that would have nicely kept the iPhone at arm's length, at least for a while.

It's not Palm dumping the PDA line that irks me so much as it is the utter lack of variety, innovation, and choices in the Centro/Treo lineup. Palm's essentially been regurgitating the same damn thing in different colors and at different pricepoints ever since Handspring's original Treo 600. Heck, the Treo line had more formfactor choices under Handspring than it has had in 5 years with Palm!

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

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