Palm's survival questioned after disastrous quarter
Posted
Dec 02 2008, 12:00 PM
by
Kim Peterson
Rating:
The way things are going, my neighborhood ice cream truck will have more sales than Palm. Shares plunged 17% today after the smartphone maker warned quarterly revenue will be shockingly meager.
Analysts had already set the bar low, expecting about $331 million in sales for the quarter ended Nov. 28. But Palm said actual revenue could be as low as $190 million. Ouch.
The problem? People aren't as interested in the $99 Centro, the centerpiece of Palm's product line. In just one year since its debut, the Centro is losing out to other phones like Apple's iPhone and the BlackBerry Curve from Research in Motion.
Palm blamed difficult economic conditions for its decline, and, to be fair, that certainly was a major factor. But Palm's stunning revenue decline started long before the current recession.
Three years ago, Palm had $445 million in revenue in the same quarter. Two years ago, that fell to $393 million. Then $350 million. And this year, $190 million.
The trend lines are dire enough that analysts are now wondering if Palm can survive. Palm is promising us the world next year, when it introduces hot new gadgets and overhauled phone software. But will that be enough to keep the company going?
"At this point, it's going to be about cash flow and keeping things alive until they can get the products out the door," wrote analyst Michael Gartenberg on his blog. "Time will tell but the first half of '09 will see whether Palm can make the leap to the next generation or not."
