March 20, 2010

Palm Reports Lower Sales

Palm Inc. repotted low sales figures on Thursday amidst a time of rough competition within the smartphone market.

The figures showed that the company shipped 960,000 smartphones to stores and distributors in the quarter that ended February 26.  This was 23 percent more than the previous quarter.  However, the number of phones consumers actually purchased was 408,000, which was down 29 percent from the previous quarter.

Rival company 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 for the quarter, its fiscal third.  However, that was mitigated by an accounting effect because of the recent drop in Palm's stock price. 

Palm lost $98 million in the same period a year ago.

The report showed revenue of $310 million, which was higher than Palm expected at $285 million.  Doug Jeffries, the Chief Financial Officer at Palm, said that the company was able to deliver several shipments early just before the end of the quarter.  Palm recognizes most of its revenue when it hits distributors, not when the devices are sold to consumers.

Jeffries said that Palm expects sales in the current quarter to be less than $150 million mostly due to carriers now having big stocks of the phone still to sell.

Thomson Reuters polled analysts and found they expect sales of $305 million in the current quarter.

Palm was a pioneer in the smartphone business, but has faced tough competition with Research in Motion Ltd.'s BlackBerry and Apple Inc.'s iPhone.

Palm introduced a new phone operating system last year, webOS, for a new line of phones.  The Palm Pre, which is one of those phones, has won critical praise but has yet to turn the company's fortunes around.

Analysts believe that Palm is now too small of a player in the phone market to be acquired.  Potential buyers might be looking more into its software and patents instead.  However, they could be dissuaded by the time it would take to get webOS running on their phones.

According to Rubinstein, Palm is attempting to boost sales by reaching consumers in the store.  He said the company is sending representatives to stores to educate salespeople so they can become more confident in selling their product.  Early results from that program are encouraging, he said.

The company is also ramping up its advertising efforts by placing a new TV spot during the first two weeks of the NCAA basketball tournament.  It is focused on explaining a useful but somewhat arcane feature of webOS, like its ability to run several applications at the same time.


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