Published in Mobiles
Palm continues to struggle
by David Stellmack on22 March 2010
Low stock price and unsold inventory part of the problem
As many analysts have feared, Palm has hit another rough patch; and this time it translates to more than just a bump in the road. The latest in a string of events has seen Palm’s stock devalued to $0 and the amount of unsold inventory levels have increased.
In the latest reports, Palm events sound better than they did a year ago, but the company managed to lose $22 million net for Q3 2010. This is an increase from the $13.7 million that the company reported for Q2 2010. It would seem that the losses are starting to mount.
Sales and inventory also seem to be a lot of the problem. Palm is reporting that they were only able to move 960,000 handsets last quarter, which is actually an increase of 23% over last quarter. So far this year, Palm has only been able to actually sell a total of 408,000. This is leading to standing inventory, which is estimated could total in the neighborhood of as many as 1.15 million units.
The rumors of Palm putting handset build production on hold have been confirmed now as true. By putting production build of new handsets on hold, it should give carriers additional time to sell existing handsets and move through inventory. Still, at the current sales rate, it would appear that Palm has as much as six months plus worth of inventory on hand and it is going to take some time for the carriers to work through this inventory.
The news has not been well received, as you might guess, which has led to Palm’s stock taking a beating, and analysts are predicting that they expect the stock price target to be $0. Palm is ripe for takeover; or if not a takeover, we have to be thinking that they are in serious need of a miracle or perhaps a big infusion of cash from a partner to buy it time to come up with another strategy. It is a shame that they are in this position, but they have some more tough sledding ahead if they are going to come out of the other side of this current crisis.