Money Matters, Simplified.
Palm's shares decline by 29% amid competition in smart phone market
by Ishita Sood - March 20, 2010 - comments
Palm’s performance for the past year has been about average. The company’s sales declined by 30 percent in the first quarter, selling only 408,000 of its Pre and Pixi smart phones compared with Apple’s 8.7 million iPhones.
Shares of smart phone-maker Palm Inc. fell by 29 percent on Friday as investors questioned its capabilities in the smart phone market, especially against competitors like Apple Inc., Google Inc., and Research in Motion.
“They might be going bankrupt. There's still some hope, but we think it's still a very risky buy,” said Vitali Savitski of Canaccord Adams.
Savitski urged all investors to sell the stocks of Palm as the company warned that its current-quarter revenue will be less than before.
C.L. King and Associates analyst talked of the problem and added that Palm has not been able to have a grip in the U.S. market till now.
Palm’s CEO talks
However, Elevation, a private equity firm, which bought a 25 percent stake in Palm in 2007, backed up Palm by saying that the smart phone-maker still has “enormous opportunity.”
Palm’s Chief Executive and Chairman Jon Rubinstein was highly praised by the Elevation team. They said, “Jon and his team have built the best mobile operating system available today and they are now working through short-term execution challenges with Elevation's complete support.”
Rubinstein talked about his company’s future and said, “We are a public company. And if there's a reasonable proposal, of course the Board has to consider it.
“But, that being said, our focus since the day I arrived here, and that's almost three years ago now, is to build a great company with a great mobile platform and great products. And that has been our focus.”
He went on to say that his company, which is working on Palm phones methodically, will be introducing a new product this year.
Kaufman Bros analyst, Shaw Wu said, “While we believe Palm has some value with its webOS (phone operating software platform) ... we are unsure of the company's prospects as an ongoing concern.”
Palm’s performance
Palm’s performance for the past year has been about average. The company’s sales declined by 30 percent in the first quarter, selling only 408,000 of its Pre and Pixi smart phones compared with Apple’s 8.7 million iPhones.
The Sunnyvale, Calif.-based company is far behind market leaders Research in Motion Ltd., and Apple, according to latest data from ComScore Inc.
“If you're LG or a Dell or an HP that wants to be in this business but doesn't have an operating system, Palm might look attractive. But whether somebody wants to pay $1 billion for that, it's hard to know,” said Tavis McCourt, an analyst at Morgan, Keegan & Co.