Many investors will say that the problems with the earnings report at Palm (NASDAQ: PALM) is that the company lost money and that revenue fell. That would be a naive view. The company's real trouble is that the amount it is getting per handset is falling sharply. Its newest product, the Centro, will not help because it is so inexpensive.
With the stock at $6, Palm's market cap is well below $1 billion. Its cash level has been falling and it only has about $250 million of liquid capital on its balance sheet.
Palm sold 968,000 handsets in the last quarter, up 29%. But revenue fell from $401 million to $296 million. That means that the yield-per-phone is so low that Palm may never be able to make money.
It the trend continues, Palm could be gone next year. According to Reuters, "slowing sales of older phones such as the Treo offset strong sales of its new, cheaper Centro phone."
That is a very, very bad trend.
Douglas A. McIntyre is an editor at 247wallst.com
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Reader Comments (Page 1 of 1)
6-27-2008 @ 7:58AM
eric said...
It is a shame. I've been using palm for about six years and I have no complaints. I couldnt work without it.
6-28-2008 @ 2:35AM
Sarks said...
Long before the Iphone came out, in an interview with Palm CEO, laughed at the concept of the Ipone rumors and criticized Apple of how a computer company would know anything about building a phone.