Palm's phone sales slump and its stock dives

Mar 18, 2010 By PETER SVENSSON , AP Technology Writer
In This March 8, 2010 file photo, a customer uses a Palm Pre Plus at Best Buy in Mountain View, Calif. Palm Inc. reports quarterly financial results Thursday, March 18. (AP Photo/Paul Sakuma, File)

(AP) -- Palm Inc. reported sales figures Thursday that showed it's having a difficult time getting consumers to pay attention to its phones in a market dominated by iPhones and BlackBerrys. The company's shares plunged in after-hours trading.

The company shipped 960,000 smart phones to stores and distributors in the quarter that ended Feb. 26, 23 percent more than in the previous quarter. However, the number of phones that were actually bought by consumers was 408,000, down 29 percent from the previous quarter.

By comparison, Apple sold 8.7 million iPhones in its most recent quarter.

"Our recent under performance has been very disappointing, but the potential for Palm remains strong," Palm CEO Jon Rubinstein said in a statement.

Palm reported a loss of $22 million, or 13 cents per share, for the quarter, its fiscal third. But that was mitigated by an accounting effect brought about by the recent drop in Palm's stock price. Excluding that effect, the loss was $102.8 million, or 61 cents per share.

In the same period a year ago Palm lost $98 million, or 89 cents per share.

Revenue was $350 million, up from $91 million a year ago, when Palm was waiting to release its newest phones.

The latest revenue figure was above Palm's own forecast, issued less than a month ago, for $285 million to $310 million. Chief Financial Officer Doug Jeffries said that Palm was able to deliver several shipments early, just before the end of the quarter. Palm recognizes most of its revenue when phones hit distributors, not when the devices are sold to consumers.

Jeffries said Palm now expects sales in the current quarter to be less than $150 million, partly because carriers now have big stocks of phones to sell off.

Analysts polled by Thomson Reuters were on average expecting sales of $305 million in the current quarter.

Palm shares closed Thursday at $5.65, up 28 cents. After Jeffries revealed the revenue forecast in a conference call, the shares fell 74 cents, or 13 percent, to $4.91 in after-hours trading. If the shares stay at that level in Friday trading, they will set a new 52-week low. The shares have traded as high as $18.09 in the past year.

Palm was a pioneer in the smart phone business, but it lagged as BlackBerry maker Research in Motion Ltd. gobbled up the corporate market and Apple Inc.'s iPhone charmed consumers. More recently, Google Inc.'s Android software for smart phones has gained traction at Palm's expense.

Palm revamped its portfolio last year by introducing a new phone operating system, webOS. It's the basis for a new line of phones, led by the Pre, that have won critical praise but haven't turned the company's fortunes around.

Analysts have suggested that Palm, which is based in Sunnyvale, Calif., is now too small of a player in the phone market and could be acquired. Potential buyers might eye its software and patents. But they also could be dissuaded by the time it would take to get webOS running on their phones.

Rubinstein said Palm is trying to boost sales by reaching consumers where many of them decide what phone to buy: in the store. The company is sending representatives to stores to educate salespeople so they can more confidently recommend and explain Palm's phones, he said. Early results from that program are encouraging, he said.

The company is also stepping up its advertising efforts, with a new TV spot during the first two weeks of the NCAA basketball tournament. Like some previous Palm ads, it's focused on explaining a useful but somewhat arcane feature of webOS: its ability to run several applications at the same time, something the iPhone can't do.

Explore further: Airbnb rental site raises $450 mn

4 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Palm expected to see loss grow, sales decline

Sep 23, 2009

Palm Inc. is expected to report a deeper net loss on a decline in revenue for its first fiscal quarter, but most investors are likely to pay closer attention to sales of the its new Pre smartphone as a potential ...

Palm Inc. teeters in crowded smart phone market

Mar 10, 2010

(AP) -- Last year, Palm thought it had all the pieces for a turnaround in the market it pioneered: A new CEO known for making the iPod a household name, a sleek new smart phone called the Pre and fresh, intuitive ...

RIM's 2Q profit falls on charges, outlook weak

Sep 24, 2009

(AP) -- BlackBerry maker Research In Motion Ltd. reported a drop in fiscal second-quarter profit Thursday because of charges for a patent settlement and said revenue for the current quarter will fall below ...

RIM 1Q profit tops view, shares wobble on outlook

Jun 19, 2009

(AP) -- BlackBerry maker Research in Motion Ltd. on Thursday reported a better-than-expected 33 percent jump in first-quarter profit as the company continues to boost market share among non-corporate customers.

Recommended for you

Ex-Apple chief plans mobile phone for India

5 hours ago

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

18 hours ago

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

US venture investments highest since 2001 (Update)

Apr 18, 2014

Funding for U.S. startup companies soared 57 percent in the first quarter to a level not seen since 2001, as venture capitalists piled more money into a growing number of deals, according to a report due out Friday.

User comments : 0

More news stories

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

Health care site flagged in Heartbleed review

People with accounts on the enrollment website for President Barack Obama's signature health care law are being told to change their passwords following an administration-wide review of the government's vulnerability to the ...

A homemade solar lamp for developing countries

(Phys.org) —The solar lamp developed by the start-up LEDsafari is a more effective, safer, and less expensive form of illumination than the traditional oil lamp currently used by more than one billion people ...

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...