Palm Announces Severe Revenue Shortfall, Big Loss

Gates must be laughing his head off watching the idiots managing Palm destroy the company for him. Palm will implode within six months because:

1) Their top level staff are incompetent
2) Their products lack innovation
3) Their OS is stagnating
4) They licensed the OS to Handspring and Sony, who have now produced better hardware than Palm
5) Their wireless strategy will fail as "smart" cellphone technology catches on over the next 12 months.
6) The m505 has a low quality screen and will flop
7) Poor sales will force further price cuts, resulting in even lower revenues than expected
8) Palm will not be able to replace the m505 for at least 6 months
9) Their revenues from OS sales are trivial - they need to sell hardware to succeed
10) Their top level staff are VERY incompetent

Expect Yankowski to be fired next week, but it's too little, too late

- The Pundit

Lest facts get in the way. There are two piecese of data that are indicative of how the m5 series is doind. First checkout Wit Capitals market estimate for the week of April 29th it shows a 10% gain forr Palm coming relatively equally out of Handspring and all the Pocket PC crowd. Separately, notice the collapse in sales rank of the Ipaq on Amazon since the intro M505. The one negative is the rating of the M505 it is low due to the screen. Other than that sales indications are good.

Why the hell would Micro$oft want to buy a bloated company with an aging, non-scalable OS, limited R+D, huge expenses, and little going for it other than a comparatively large installed base?

Gates' only concern would be if Sony bought Palm and turned it into a lean, mean company with more PocketPC-like hardware like the CLIE N710C.

Highly unlikely that Microsoft would buy Palm as it would not clear AntiTrust authorities. But it make sense to Microsoft to purchase Palm, stagnate Palm and dominate with Pocket PC. Then they would have a near monopoly in OS for handheld devices.
As to Palm's mistake, it is hiring an outsider as CEO of the company. The CEO had to learn the "ropes" so to speak, and that might have contributed to the numerous missteps Palm had taken. Hopefully, Palm will have learn from it lessons, and produce 'chic' product like the ipaQ and Sony Clie. While m505 is cool, it just lack that certain 'wow' factor that will spur sales and create fashion statements. m505 focused on the functional side not the fashionable side. Sometimes being user friendly is not the end-all. Apple OS had always been easier to use than Microsoft's Windows, but it had to take a "fashionable" iMac to save Apple from collapse.

and then MSFT can buy them!

and then why not have General Electric buy all of them??!?!!?? :-)

Hell. I'll buy them :-)

I just read the below message from the CCO of Palm.

I think some information is missing here.... The Financial quarter ends when ? I believe it is in May. So yes, the M50x series have not had their full impact as yet, some of the pre-orders must have been accounted for as deferred profits, another nice financial tool to fool the investors since deferred profits are only profits once they really arrive...

Now, in their announcement, they say:

"The shipment delay accounts for the bulk of our reduced revenue outlook and is exacerbated by the slowing economy, which we believe has spread beyond the U.S."

But at the same time it says above:
"Palm's CEO also said that all the news wasn't bad. They have resolved the causing the volume shipment delay and begun shipping the m500 series outside the United States. They expect to have it available in all major markets by the end of June."

Now, if the economy is realy slowing (who doubts it still...?) and it has spread beyond the U.S. (meaning Europe), which means reduced sales-outlook outside of Europe, how can the CEO say that the news isn't all that bad because shipments have started to other countries....???

To me this is obvious... clearly Palm will have problems in Europe as well. They have never said that next quarter will be good. If they were really convinced of next quarter being better, they WOULD have announced that, by saying something to the effect of shipments being delayed, therefore earnings are delayed. This is TRUE financial talk.

Whatever was said can only mean one thing, the M50x series is not selling as they were hoping.

Also, the analysts comments whether or not Palm will run out of cash is frightening,if this impacts R&D then they will become the next Rambus...own the proprietory information and zero sales, just live of license revenues... good night palm...

I wonder what their "several surveys" are based on. Are these surveys amngst consumers or amongst resellers such as Staples ??? The product has not been long enough on the market to say these things. There are always people rushing out to buy the first products out there (I for one will be the same when the Handera hits home). How many M500's were returned to Staples and Office Depot within the first 2 weeks ? How does this impact the sales ? Is that part of the high inventory - brand new products ?????? That would really be scary.

Palm has been playing the same game as most other companies over the past year, push [products out the door and let resellers / distributors hold the inventory. Now that these are overstocked, orders were stopped or have slowed (quite logically and I am still wondering why they let themselves get into this situation).

Q: If the products (M50x) are really shipping everywhere now, WHY did Palm not announce that earnings would be back in line?

A: Blame it on the "slowing economy", that is an another way of saying that sales are down because they have mucked up their sales forecast...

Q: What does this mean: "They also report positive initial U.S. retail sell-through data on their new products and that several surveys indicate that Palm branded and Palm Powered devices continue to hold or increase Palm's leading share of the handheld market."

A: NOT necessarily HIGHER sales but HIGHER market share maybe. If they blame everything on a slowing economy, then theoretically, the overall market is down. Could be that the sales are down while market share is up (big drop in sales from winCE products, which was discussed before - a potential problem for Compaq to maintain the high sales figures in Europe which could have materialised, again, because of the slowing economy).

oh yes, forgot to mention this:
Palm Chief Financial Officer Judy Bruner, declined to discuss the exact cash position, but said that managing cash was a priority. She said the company would provide further information in June, when Palm reports its quarterly results.

``Cash will be tight and cash preservation will the number one be a priority for us right now, and there is a possibility that we will seek to raise capital,'' she said.

So, what about R&D ??????????????????????

I was an avid PalmIIIx user I was "dying" to wait and see the new products. My mind is made up, I rather spend $450 on a Handera with 64mByte CF card than a color Palm at the same price. It would not surprise me if Sony will take away sales from Palm or WinCE products... who know, I guess we wil find out in another 3 months when Palm annouces their net quarter earnings or earnings warning/shortfall....

Good luck Palm, hope you make it...

Does the COO of Palm actually make public comments on web sites? I wonder....

If things really aren't that bad for palm, why would the cco feel need to perform damage control...on a web site discussion!

This is bogus. don't feed the trolls :)

Having a full channel is not the end of the world. That issue can be fixed. Having $300 million in losses is not good but I think the main issue is the end of the XTND deal. That should have helped PALM with their entry in to businesses where the margins are. Now the question is how can PALM raise margins? Selling boxes is not the way.

I know you're full of yourself, but get off our board and stop wasting everyone's time. thanks.

Damn it. Hey kid, Where's my lighter?

Don't spend it all in one place!

DELL is not doing that well either, they expect revenue to decline and they are in a serious price war with compaq and other pc makers.

for a few more years???

I meant 'Michael.' Darn typos. I hadn't seen or remembered him posting before so sorry for not believing him right away.
I also don't think Palm is going under but they do need to work on their Mac support a little. MyPalm and their Desktop software for Mac are both lagging behind.

Folks,

I'm Chief Competitive Officer at Palm, and yeah this is me speaking. Ed dropped me a note to double-check, so he can verify that.

Thanks for asking -- it's good that you folks are being thorough.

I won't try to excuse our financial situation to the people who are criticizing us; the only proper response is to fix the problem, which we will.

To respond to a couple of questions (some paraphrased):

>Why would a manager from Palm spend time responding to discussions on a board?

Because it is the easiest way for me to talk directly to our customers and potential customers. Even more important, you folks are the opinion setters. You matter. Most of the press people I speak with are great, but they all filter even if they don't mean to.

If you care enough to give us advice online, it makes sense for us to listen and (when we can free up the time) respond. You should also know that we do read your advice and forward it internally, even when we don't have time to respond.

>The m500 and m505 were announced too early, stalling Palm's sales.

I think most of us agree with this. We thought the production ramp would go faster, and wanted to get the PR boost of announcing at CeBIT. It was a calculated risk we understood at the time, and the calculation was wrong.

>What's your approach to enterprise now that the Extended Systems acquisition was called off?

That's a longer discussion than I have time to cover comprehensively this morning, but I'll try to give a quick summary. Enterprises have a huge diversity of computing environments -- not just Microsoft but also Sun, Siebel, SAP, Oracle, etc, etc. Ultimately what a company needs is a handheld platform that makes a great client to all those computing environments. We think we are the best platform for that today, and want to build on it. One way to do that is to buy a company that pulls it all together, but it's not by any means the only way to make it happen.

>"The m505 has a poor quality screen and will flop"

Now I will really get flamed.

The m505 does not have a low quality screen. It was designed to be the thinnest, lightest color handheld on the market. It is, by far. Considering that it also has an expansion slot, I think it's an outstanding value. Period.

Is it the ideal product for everyone? Of course not. We deliberately traded off some screen brightness to get thinness and light weight. I like the tradeoff, but other folks may not. Designing a handheld is all about making tradeoffs. I was pretty up front about those tradeoffs even before the m505 was released, in posts I made online.

I think our hardware team knew what it was doing. They are not always trying to design for the elite folks who post most vigorously online; remember how much online skepticism there was about the m100, and then it sold great and brought a lot of new customers to the handheld market.

The whole reason we did licensing was so you'd get freedom of choice. If you like another Palm Powered product better than the m505, that's cool. It doesn't say anything bad about the Palm-branded hardware; it just says that the Palm-branded stuff was designed for somebody with different preferences than you.

In fact, the thing that would really disappoint me would be if every Palm Powered handheld looked exactly the same. That would mean we're not all driving freedom of choice and innovation.

Thanks for listening,

Mike
CCO
Palm, Inc.