Palm Q2 FY09 Conference Call Highlights
Palm Inc. today reported their sixth consecutive quarterly loss. After pre-announcing significant declines, Palm reported total revenue of $191.6 million with a net loss of $(508.6) million. The larger than usual loss was primarily inflated by a $396.7 million tax provision charge on its U.S. deferred tax assets. On a non-GAAP basis the net loss was still a staggering $(80.2), or $(0.73) per diluted share.
The company also saw a massive contraction in smartphone sell-through, which was down 42% (or about 400k units) from the previous quarter and declined nearly 12% from a year earlier. Stating "We're working through an undeniably difficult period," Palm CEO Ed Colligan squarely placed the blame on the maturing Palm OS line and Centro products combined with the extremely tough economic climate.
In a departure from the usual format, the call began with the outgoing CFO Andy Brown delivering the financial data. Smartphone revenue accounted for 89% of the total at $171 million on 556k units shipped. Handheld revenue came in at $21 million with a sell-through of 150,000 units, a 51% year over year drop off. Palm's average selling price for smartphones rose a bit to $305 due to the newly released Treo Pro. Overall gross margins dropped to 20.1% mostly due to charges related to inventory component purchase commitments.
Andy Brown also talked about Palms recent efforts to contain costs and manage cash burn. Palm currently has around $220 million in cash and is carefully managing that while still ensuring that they adequately fund their next generation product development. Recent cost-savings initiatives, include reducing its U.S. work force by around 10%, consolidating European operations, and shifting responsibility for Asia Pacific sales, marketing and administrative support to its U.S. offices.
Ed Colligan then took the call and began by thanking Andy Brown and wishing him well saying he has been key part of Palms transformational efforts and was particularly instrumental in the recapitalization transaction. Mr. Brown will be stepping down effective Jan 7th, he will be succeeded by Douglas C. Jeffries, who was previously the chief accounting officer at eBay. He then went into the business details and started of saying "clearly we are operating in a extremely tough climate and we expect to face continued challenges in the coming months."
Ed stated they they understand that a new "pipeline of products" is necessary to maintain momentum, and we will soon be replacing our aging product line with its next generation products. He warned there are still a number of rough months ahead, especially during the next quarter. He does not project a possible return to profitability until sometime in calendar year 2010.
In a rare note of positive forecasting, Ed was willing to share was that Palm plans to launch the Treo Pro with a major US carrier during the current quarter. Many months of rumors and a recent internal memo leak, almost certainly point to this being a CDMA version of the Treo Pro on Sprint.
Waiting for Nova...
The topic of the new operating system was brought up many times, however as before, virtually no hard details were revealed. Eveyone is going to have to wait for the big CES announcement. Colligan said they have had some early disclosures with select carrier partners and developers whom have been "universally excited." Colligan did reaffirm that the first products would ship sometime before the end of Palm's fiscal 2009 (late June) as has been planned. He did let slip a small detail about the new product as he actually referred to the unit specially as a "Phone".
Another key refrain Ed used a number of times throughout the call was that the new OS would have to stand out as a "differentiated product." In response to a question he did state that the new OS and its products would be more targeted towards consumer/prosumer applications and that Windows Mobile would remain as their enterprise product.
Looking Ahead...
A couple of interesting questions came up in the Q&A. One questioner asked if there would be any upcoming product refreshes before Nova. Ed responded that other interesting tidbit is that besides the expected US Treo Pro carrier announcement, there will not be any future product announcements before the next-generation products.
The End of the Handheld Business?
Another analyst plainly asked when it would make sense for Palm to shut down the handheld business. Colligan replied that it continues to sell and they would push them out as long as there is still sufficient demand. However he was quite frank and stated they are not developing new ones, and as such there is an inevitable end to the product line.
The following audio clip is from outgoing CFO Andy Brown talking about Palm's challenges and prospects going forward.
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RE: Goodbye Palm PDA
The last known classic PDA user.
RE: Goodbye Palm PDA
The last known classic PDA user.
RE: Goodbye Palm PDA
welcome to 2004. let it go.
How do you characterize the success of the iPod Touch? Couldn't Palm have done that?
-Bosco
m105 -> NX70v -> NX80v -> iPhone -> iPhone 3G
RE: Goodbye Palm PDA
RE: Goodbye Palm PDA
RE: Goodbye Palm PDA
the ipod and the zune are MEDIA PLAYERS and 99.9% of the people that buy them use them as MEDIA PLAYERS and NOT as PDAs.
Palm already attempted this once and created the LIFEDRIVE and failed.
secondly, no way is palm going to create a media player that beats ipod. not device-wise, not ecosystem wise, and not coolness factor wise.
IMO, palm's only hope is great unique smartphone + great unique services = great unique experience. anything half-assed will FAIL.
RE: Goodbye Palm PDA
If it looks like a duck and talks like a duck......
>>>Palm already attempted this once and created the LIFEDRIVE and failed.
I'm not sure even Palm knew what the hell they were trying to attempt with the Lifedrive.
The last known classic PDA user.
RE: Goodbye Palm PDA
The lesson Palm needs to learn from that experience is to get whatever they are going to release right, support it properly, and grow the market. Unfortunately, all of that takes money that they may not have now, and may not be able to get later. So I wish them luck, but I, for one, am not too optimistic.
RE: Goodbye Palm PDA
if the PDA - Personal Digital Assistant - market was actually a viable market, someone would be in it making money. however, the market is dead because very, very few people in the world want to buy a PDA vs. a smartphone.
RE: Goodbye Palm PDA
Their execution sucked. It's not that the market isn't there. It's that Palm sucks at making products people want to buy. The PDA market still exists, and it's still very large, despite what you think.
-Bosco
m105 -> NX70v -> NX80v -> iPhone -> iPhone 3G
RE: Goodbye Palm PDA
there is a big IPOD market out there. if you think that Palm can make a BETTER IPOD and has a STRONGER BRAND and a STRINGER ECOSYSTEM than APPLE, then yes, Palm should get into the IPOD business.
wrong again
MikeCon, wrong again
RE: wrong again
> as he actually referred to the unit specially as a "Phone"...
Indeed, this is the first itme that I can remember that it was not referred to as a "device":
== "...Our new platform is nearing completion and our first next
== generation phone is set for launch in the first half of calendar
== year '09 as planned..."
RE: wrong again
RE: wrong again
2. OS isn't ready but they are scrambling to port Negal's Cobalt Clock demo to Nova in time for its big CES unveiling.
3. No carriers are onboard yet
4. No developers are onboard other than Dataviz for DTG & Astraware for Solitaire & Bejeweled
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: wrong again
look! it can multitask playing a midi in the background! look! see the shadow on the second hand!!!
now THIS is innovation!!!!!!!!!!!
RE: wrong again
most infamous moments in palm history
1. "yes this really is a gold threaded suit." - yankowski
2. "look at the shadow on the second hand, cobalt really is amazing." - nagel
3. "they're not going to just walk in." - colligan
4. "no, foleo can't do youtube but i wish it has a faster processor." - hawkins
im sure there's more.
RE: wrong again
(2) Palm hasn't said ANYTHING about what is happening January 6th - only the Me-Too Media, blogs, and posters have. Be Careful Out There!
(3) Colligan mentioned carriers and developers yesterday:
Carriers:
== "...As we started early disclosures to potential carrier partners,
== we've been extremely pleased at their positive reaction to our new
== platform and products..."
"Early disclosures".
That's it.
Colligan: "I can imagine that "we're going to have a DYNAMITE platform!"
Potential Carrier: "Swell! Let's talk more when it's ready and debugged."
Developers:
== "...And on the OS front, there are existing developers that we
== have briefed. We want to be sure that we have a robust set of
== applications as we launch the product, but we haven't made it
== a broad-based thing at this point in time and that would be
== further out..."
"Briefed".
That's it.
How's THAT for lack of developers.
RE: wrong again
RE: wrong again
Palm wants us to reflect on the announcement; that's why they announced an announcement without saying what was going to be announced.
Buzz.
Free advertising.
So...what do YOU think is going to be announced?
And how!?
A PHONE?!
Jumping into that is suicidal. I hope it's not PHONE ONLY.
And yeah, kill what they call the "handheld" business - and make way for the TABLET business.
That's my story and I'm sticking to it.
RE: A PHONE?!
yes, so they should bet the farm on some niche extraneous contraption product that only a few dozen hipsters want?
Palm. Burn in hell.
On that note, I applaud the disastrous quarter. May Palm go bankrupt and I hope Colligan never gets hired in any other company. Incompetent fools.
RE: Palm. Burn in hell.
I do, however, applaud that they've been bringing in some good people to run things. To me, it looks like they are really trying to pull off something huge. We've seen it happen before with other companies, lets reserve judgment until something happens (or fails to do so).
ACCESS
Been at a .dotbomb, the cycling of the CFO usually means they can't afford him anymore and he very clearly sees the writing on the wall.
The smart thing to do is to make Styletap full-featured so people can just vacate the obsolete Palm hardware. Hell, even just port the Palm's easier-to-use PIM experience to Windows Mobile (which they haven't even bothered to do) and be done with it.
Even going from the superior OMAP processor in the 800w to the cheaper and slower Qualcomm in the Treo Pro speaks volume.
RE: ACCESS
Um...'No va' might mean No Go (Portugese? Spanish?), but 'Nova' (all one word) is Latin for 'New' (as in 'Novus Hominus', New Man, describing the self-made individuals who attained the offices of state in Republican Rome and weren't part of the established aristocratic elite...quoth the pedant).
But yeah I agree: what was so badly wrong with the offering from Access? Evidently *something* was wrong as no-one's got it on a device for market (yet).
Gareth
Palm T/X (on its 2nd screen); Apple Messagepad 120 OS 2.0 (yeah, seriously)
RE: ACCESS
No doubt ALP was something Palm started, and had to avoid all duplication of code by the scorched earth contract with Access. Really smart first move considering even Google beat them to market. iirc, Access is already working, just looking for a carrier partner.
RE: ACCESS
I'm no stock expert,but these numbers don't seem to bode well for Access:
http://quote.tse.or.jp/tse/quote.cgi?F=listing%2FEDetail1&MKTN=T&QCODE=4813
Access
1979 - 2009
R.I.P.
http://en.wikipedia.org/wiki/Access_Co.
RE: ACCESS
He didn't specifically mention ALP or their revised focus or any hardware partners or anything like that.
On a related note...
"8) The endgame from Elevation is mere weeks away. It will be the perfect ending for the Palm soap opera. Trust me*."
So do you expect the endgame to occur PRE or POST-CES?
IF the CDMA Sprint Treo Pro does come out, it still may very well be Palm's last-ever release....and I wonder in what volume of handsets have been purchased by Sprint? I wonder if this'll break the near-mythical "blink and you missed it" lifespan of the 800w or the older but not forgotten Sony-Ericsson T608 on Sprint?
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: ACCESS
I'm still around. Not here, particularly: there's not been much of interest going on in this locale for a good while. Still happily and busily employed at ACCESS, which is still a going concern, so that's another two mis-predictions you can add to the lengthy list of things about which Mikey "i-Book-Pod-Touch Air" Cane has been thoroughly in error.
What ever happened to him after Access announced that it suddenly was going to go back to the drawing board to completely "reposition" ALP OS?
I don't recall us ever making any such announcement. Maybe it's something you hallucinated, fantasized or heard from Mikey.
Merry Christmas, guys. Still a few hours left to make amends for your wicked ways and see whether you can possibly forestall another stocking full of nothin' but twigs and coal.
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Goodbye Palm PDA