Money Matters - Simplified

Pre sales lackluster; Palm cuts forecast

Palm on Thursday announced that its Pre smartphones are not selling as per expectations and due to this development its revenue would be “well below” its previous forecast for the fiscal year.

Palm’s devices are facing tough competition in the market from rivals like Android OS and Apple’s iPhone.

Palm’s devices are facing tough competition in the market from rivals like Android OS and Apple’s iPhone.

Palm’s Chief Executive Officer Jon Rubinstein said in a statement, "Driving consumer adoption of Palm products is taking longer than we anticipated.” He also mentioned that Sprint and Verizon are still with them.

"Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products," said Rubinstein.

Right after the announcement, Palm’s stock price fell by 17 percent and experts started questioning if it would be able to survive till 2010 year-end holiday shopping season.

Options for Palm
The competition in the smartphone market is only growing each passing day where companies like Apple, RIM, Microsoft and Google are trying their best to capture the market.

After Palm’s announcement, analysts started calculating what could possibly happen to Palm by year’s end. However, there are only few options like Palm could decide to go private; could be sold; could even try to raise more funds from its Elevation Partners (an investment firm that has invested over $400 million in Palm since 2007).

Lastly Palm could make one final attempt by focusing its attention on expanding the number of carriers worldwide for selling its smartphones.

In the past too there were speculations that the company will be sold but now analysts are asking who would be buying Palm knowing its current state.

According to Jack Gold, an analyst at J. Gold Associates, "The best candidates to buy Palm might be a Chinese or Japanese company wanting to get in the smartphone market, but realistically what would they buy? The odds that Palm can last another year are no better than 50-50 right now, unless they build momentum and make money."

Ken Dulaney, an analyst with Garter Inc. says that Palm "needs to be acquired." Dulaney thinks that Research in Motion Ltd. could benefit by acquiring Palm.
Though, Dulaney refused to predict Palm’s fate, but the researchers at Garter have estimated that by 2012 Palm phones will have only 1.4 percent share in the smartphone market.

Leaked details of Palm WebOS 1.4 firmware confirmed
Sprint on Thursday confirmed the leaked WebOS 1.4 update details. The update will provide Palm Pre new features like video recording, Adobe Flash 10.1 and a Flash beta app for other devices of Palm.

In the update version formatting, browsing and time zone bugs have been fixed. Sorting e-mails have been made easy. The update is expected to be unveiled on Friday.