Palm shares slump amid talk of poor Verizon sales
Stock takes a further beating yesterday, falling to $8.50 from a high of $17 in October, on new fears about poor sales
Published: 24 February, 2010
READ MORE: US | Palm | Handset | WebOS
Palm's stock took a further beating yesterday, falling to $8.50 from a high of $17 last October, on new fears about poor sales of its Pre and Pixi smartphones. The two handsets, and their slightly modified 'Plus' variants for Verizon Wireless, bear the whole burden of Palm's turnaround hopes, but as it waits for results, its cash pile is dwindling alarmingly, prompting repeated speculation of an acquisition.
Sales of the phones at launch carrier Sprint Nextel, and with European partners such as O2 UK, have been steady but far below expectations. Although there are no official figures on sales by Verizon since it shipped Pre Plus and Pixi Plus early this year, several analysts believe them to have been disappointing.
This week, Bank of America/Merrill Lynch analyst Vivek Arya lowered sales estimates from 1.1m units in Palm's third quarter to 900,000, and from 1.5m in the firm's fourth quarter to 1.2m - a shortfall of 500,000 phones, mainly in the US.
"Palm's superior platform features have not translated into sufficient carrier support and consumer demand, and we are concerned the window of opportunity may be closing as Google's Android ecosystem gains ground, RIM revitalizes its portfolio, iPhone increases its presence, and as Microsoft reboots its efforts with Windows Phone 7," Arya wrote in a research note. "With only $130m of net cash in an opex intensive space, Palm's options may be limited in our view."
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