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Palm Pre beats expectations, drops WiMo to focus on WebOS

post #1 of 38
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Palm announced smaller than expected losses on sales of the Pre, but its outlook failed to excite investors. Going forward, the company plans to raise new capital and bet the farm on WebOS, dumping both its older Palm OS and Microsoft's Windows Mobile.

Palm announced sales of 823,000 smartphones, including both its new WebOS Pre and existing models of Treo and Centros that use the classic Palm OS and Windows Mobile. Wall Street's expectations had come in at 700,000 to 800,000.

"I think they had a really strong 1Q. Obviously, well above expectations," said Avian Securities analyst Matthew Thornton in a report filed by Yahoo Finance. "But when you back out the first-quarter upside and the full-year guidance that they provide, then there really isn't much upside for the last three quarters. Of course, 2Q is going to be down."

Palm reported a net loss (applicable to common stockholders) of $164.5 million for the quarter ending in August. It plans to raise new capital in the sale of 16 million shares. Elevation Partners plans to buy $35 million at the offering, according to the report.

After the very high profile introduction of the Pre in January, the company almost silently launched the Pixi, a slimmed down new WebOS phone without WiFi, earlier this month. It is expected to sell for $99 exclusively through Sprint later this year. The Pre's launch fireworks fizzled with the introduction of the iPhone 3GS, which erased the hardware advantage Palm expected to maintain, dramatically reshaping inventor's hopes.

In the company's earnings conference call, Palm chairman and chief executive officer Jon Rubinstein, a former Apple executive (and NeXT veteran), seemed to channel Steve Jobs of ten years ago in saying, "Were making significant progress with Palms transformation, and our culture of innovation is stronger than ever. Were launching more great Palm webOS products with more carriers, and turning our sights toward growth.

Rubinstein said Palm would be working to develop a family of WebOS products, establish a "world-class" development platform, build greater awareness of the Palm brand, and work to execute its goals with precision.

Part of that strategy involves dumping any distractions, including both the company's original Palm OS and the Windows Mobile partnership that Palm forged with Microsoft in 2006, a year before Rubinstein arrived. Palm's support for Windows Mobile helped nearly double Microsoft's market share at the time.

The discontinuation of Palm's Windows Mobile devices comes on the heels of Motorola's announcement that it will also drop Windows Mobile to focus on Android, and the news that HTC, the largest Windows Mobile manufacturer, plans to offer half of its smartphones running Android next year.
post #2 of 38
Quote:
Originally Posted by AppleInsider View Post

The discontinuation of Palm's Windows Mobile devices comes on the heels of Motorola's announcement that it will also drop Windows Mobile to focus on Android, and the news that HTC, the largest Windows Mobile manufacturer, plans to offer half of its smartphones running Android next year.

Motorola dropping Windows Mobile??? When did they announce that? I've seen the rumors but I've never seen anything from the company itself. Got a link?

(EDIT) Did a bit of searching and the closest thing I can find to that is a statement saying that Moto will be using Android exclusively for its "consumer" devices but Windows will remain on "business" ones. The distinction between a consumer smartphone and an business smartphone escapes me, I don't see any great technological difference - just a question of how you spend your marketing dollars and which apps you preload.

- HCE
post #3 of 38
I wonder why they didn't break out sales number for the Pre. Pre plus WinMo plus original Palm OS tells us something, but I think most people would be interested in hearing how many Pre units have been sold.
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post #4 of 38
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #5 of 38
MOT should buy Palm -- it's what they need in IP...
post #6 of 38
Quote:
Originally Posted by libertyforall View Post

MOT should buy Palm -- it's what they need in IP...

Very true. The key to success here in with control os the OS and the proprietary system with an open architecture for development of software. Palm does not have the economies of scale, but Moto and Nokia have it. So would Dell.

Building phones, PCs with somebody's OS is a low margin business that is very unstable. Look what happened to the PC business. MSFT and INTC control the architecture... and they made most of the money. Most box makers are sucking wind.

Palm has a shot... if they move quick. They got to cut deals with Verizon, T-Mobile, and foreign carriers like China Mobile, etc. Especially in markets where the iPhone is not there, yet.
post #7 of 38
I would not want to bet my farm!
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post #8 of 38
I usually stay out of the financial discussions, but this one confuses me. The headline makes it sound like good news for Palm, but I failed to see any good news for Palm, here. They lost money and they are still hiding the sales figures for the Pre. Hiding sales figures instead of boasting about them is always a bad sign no matter who does it. The only good news I see is Palm's decision to drop the dead weight. WM is taking a well deserved beating. That always brings a smile to my face.
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post #9 of 38
Quote:
Originally Posted by Mac Voyer View Post

I usually stay out of the financial discussions, but this one confuses me. The headline makes it sound like good news for Palm, but I failed to see any good news for Palm, here. They lost money and they are still hiding the sales figures for the Pre. Hiding sales figures instead of boasting about them is always a bad sign no matter who does it. The only good news I see is Palm's decision to drop the dead weight. WM is taking a well deserved beating. That always brings a smile to my face.

I was wondering the same thing. It is sad that Palm is a sinking ship.
post #10 of 38
Quote:
Originally Posted by NasserAE View Post

I was wondering the same thing. It is sad that Palm is a sinking ship.

wouldn't palm be one of the... um... passengers, leaving the sinking ship?
post #11 of 38
I am COMPLETELY confused here, folks! According to another site (MDN), on which the title of the article is "Beleaguered Palm’s loss widens 293% year-over-year to $164.5 million, sales badly miss expectations" . . . .

""Sales fell to $68 million, badly missing analysts' forecasts of $291 million," Goldman reports.

So which is it? "Palm Pre beats expectations" or "Palm is going down the crapper?"
post #12 of 38
Quote:
Originally Posted by VinitaBoy View Post

I am COMPLETELY confused here, folks! According to another site (MDN), on which the title of the article is "Beleaguered Palms loss widens 293% year-over-year to $164.5 million, sales badly miss expectations" . . . .

""Sales fell to $68 million, badly missing analysts' forecasts of $291 million," Goldman reports.

So which is it? "Palm Pre beats expectations" or "Palm is going down the crapper?"

I think both, actually. Palm is going down the crapper, but it's not going down as fast as expected... therefore the executives have the audacity to claim that the company is well on its way to a recovery, even though it's currently losing money. Anyway, time to say Windows Mobile is pretty far from a Windows monopoly
post #13 of 38
Quote:
Originally Posted by VinitaBoy View Post

I am COMPLETELY confused here, folks! According to another site (MDN), on which the title of the article is "Beleaguered Palms loss widens 293% year-over-year to $164.5 million, sales badly miss expectations" . . . .

""Sales fell to $68 million, badly missing analysts' forecasts of $291 million," Goldman reports.

So which is it? "Palm Pre beats expectations" or "Palm is going down the crapper?"

I saw that as well. I'm trying to figure out which one is closer to the truth.
post #14 of 38
Quote:
Originally Posted by VinitaBoy View Post

So which is it? "Palm Pre beats expectations" or "Palm is going down the crapper?"

It could be that both are true. "Palm Pre beats expectations" only talks about one specific device doing well, not the company as a whole.
post #15 of 38
If Palm can make it through these tough times and the onslaught of Apple's iPhone, then it deserves to live.

After all they dropped Microsoft, and any enemy of my enemy is my friend.

A friend with a keyboard too.


Palm the underdog. Or dog under. Can they last?
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post #16 of 38
Quote:
Originally Posted by addabox View Post

I wonder why they didn't break out sales number for the Pre. Pre plus WinMo plus original Palm OS tells us something, but I think most people would be interested in hearing how many Pre units have been sold.

I read in an e-mail that Forbes sent me today, that the estimate is that Palm may have sold as many as 550,000 Pre's in the quarter. While that doesn't look like an impressive number when compared to iPhone sales, I suppose it is above the expectations set for the Pre.
post #17 of 38
I couldn't find my Forbes e-mail, but this article from CNN Money explains it.

Remember that Palm, just like Apple has a lot of deferred income from the phone. Once that income is taken into account their sales jump from $68 million to $360.7 million, and profits move from -$1.17 a share to -$0.10 per share.

Read it here:

http://money.cnn.com/2009/09/17/tech...ings/index.htm
post #18 of 38
Quote:
Originally Posted by AppleInsider View Post

After the very high profile introduction of the Pre in January, the company almost silently launched the Pixi, a slimmed down new WebOS phone without WiFi, earlier this month. It is expected to sell for $99 exclusively through Sprint later this year.

Huh! Apparently, they had some pennies to rub together...

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post #19 of 38
Android is a very good mobile OS, nice to see that HTC is stepping in to that, It evolves very quick and has loads of potential.
The base is a LINUX kernel, wich on its turn is derived from UNIX.

Palm makes very nice machines, wich never feel like crap. webOS is also based on LINUX. I hope they'll manage to stay and secure their future.
I love my iPhone, but good competition is healthy!
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post #20 of 38
Quote:
Originally Posted by melgross View Post

I couldn't find my Forbes e-mail, but this article from CNN Money explains it.

Remember that Palm, just like Apple has a lot of deferred income from the phone. Once that income is taken into account their sales jump from $68 million to $360.7 million, and profits move from -$1.17 a share to -$0.10 per share.

Read it here:

http://money.cnn.com/2009/09/17/tech...ings/index.htm

Presumably, the change in GAAP accounting might help Palm out here then as well?
post #21 of 38
Quote:
Originally Posted by hdasmith View Post

Presumably, the change in GAAP accounting might help Palm out here then as well?

This is something that most technology companies have been working for. I like the concept of GAAP as it requires companies to tell us more than they used to which is a good thing, and why many aren't happy with it. But some of the rules are arcane, and don't really express the financials properly, even though I understand why they do what they do. The concept of unintended consequences.

I Palm's sales are expressed as $68 million because of GAAP, when they actually sold $360 million of product, even if it's going to be accounted for over two years, then that should be given as their sales.

I understand the problems that some companies have made with this. Computer Associates, a few years ago manipulated their sales and earnings with this, by billions. This was one reason the new rules came into being, but they're too literal in some areas.
post #22 of 38
Quote:
Originally Posted by Corax View Post

Palm makes very nice machines, wich never feel like crap.

I suppose the Pre is the exception.
post #23 of 38
I love that the palm pre exceeded expectations, yet palm as a whole lost 160 million. nice
post #24 of 38
Great! More businesses everywhere need to jump on the dumping Microsoft bandwagon.
post #25 of 38
Quote:
Originally Posted by miketh01 View Post

I love that the palm pre exceeded expectations, yet palm as a whole lost 160 million. nice

Why do we assume the Pre exceeded expectations? What were the publicly stated expectations? This is just marketing/pr speak. If the Pre had exceeded any expectations, they would be boasting about specifics. I think the iPhone killing Pre failed to meet expectations and what we are seeing is damage control.
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post #26 of 38
Quote:
Originally Posted by miketh01 View Post

I love that the palm pre exceeded expectations, yet palm as a whole lost 160 million. nice

That is quite likely and there is nothing wrong with that at this point. Considering that WebOS and the Pre were major investments (dont forget advertising) and it has only had one quarter to sell, this does not indicate a failure. It only indicates that they lost money for the quarter. When we need to look for is this next quarter (and each subsequent quarter) of Palm selling more Pres and other WebOS devices, or more importantly reducing the net loss. As they are officially dropping a lot of dead weight with any device that is not WebOS-based we may see Palm actually be in the black for the next quarter. This is not unlike the resurrection of Apple back in the late 1990s.
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post #27 of 38
Quote:
Originally Posted by solipsism View Post

That is quite likely and there is nothing wrong with that at this point. Considering that WebOS and the Pre were major investments (dont forget advertising) and it has only had one quarter to sell, this does not indicate a failure. It only indicates that they lost money for the quarter. When we need to look for is this next quarter (and each subsequent quarter) of Palm selling more Pres and other WebOS devices, or more importantly reducing the net loss. As they are officially dropping a lot of dead weight with any device that is not WebOS-based we may see Palm actually be in the black for the next quarter. This is not unlike the resurrection of Apple back in the late 1990s.

It seems like every other day I hear something about the Pre and how it's coming along. I think as it's popularity rises, price drops, and development advances, the pre will definitely make a turn and start yielding some profits. By then, it might even be offered by Verizon as well.
post #28 of 38
Quote:
Originally Posted by Corax View Post

Android is a very good mobile OS, nice to see that HTC is stepping in to that, It evolves very quick and has loads of potential.
The base is a LINUX kernel, wich on its turn is derived from UNIX.

Palm makes very nice machines, wich never feel like crap. webOS is also based on LINUX. I hope they'll manage to stay and secure their future.
I love my iPhone, but good competition is healthy!

Just pointing out the obvious: as an OS X variant, the iPhone's lineage runs back to Unix as well.

Looks like 'ix (outside of the Blackbery alternative, which will stick around as well) is finally accomplishing in mobile computing what should have happened (on technical merit) in the PC world: displacing an inferior MS product.

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post #29 of 38
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Originally Posted by chronster View Post

It seems like every other day I hear something about the Pre and how it's coming along. I think as it's popularity rises, price drops, and development advances, the pre will definitely make a turn and start yielding some profits. By then, it might even be offered by Verizon as well.

I'm not trying to be contentious, but outside of the tech-centric web I really don't hear much about the Pre at all. Certainly nothing remotely approaching the buzz that the iPhone was able to generate, which is inevitable in that the iPhone got there first and remade the category.

But that's the problem for competitors, at this point-- short of making something jaw-droppingly revolutionary, Apple has sucked up all the oxygen in the "holy mackerel, just look at this thing" room.

The Pre was able to get some of that going, pre-launch, at least among the tech savvy, but they don't seem to be doing much to sustain it. The Pre is on the market, you can buy it if you want, some people like it a lot, and that's it.

And I'm puzzled by the extremely low-key Pixi announcement. At one point there was a lot of talk of how a family of WebOS devices were going to take the market by storm, no doubt, but Palm just seemed be sort of "Oh, and here's this, whatever."

Don't get me wrong, I think the Pre is fine phone, and I'm sure it will do solid business, but momentum? Not seeing it.
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post #30 of 38
Up here in Canada, Rogers has absolutely no regret about not having the Pre. Any Rogers middle manager (like in GTA-marketing) will tell you it's all but a failure. Android is turning out to be something of a disappintment for Rogers as well. They went all out to market it and it's not getting enough traction. Simple reason: iPhone.

Now Bell thinks it can rescussitate itself (after so many scew ups) by heavily promoting the Pre. Good luck, Bell. No wonder you're in the basement today.

Unless Palm gets its act together, and fast, their future is really uncetain.

The Pixi?? What? Wasted development. Focus on making the Pre more robust or roll out a new and better version asap. And improve the housing. It feels like garbage to hold. Keyboard sucks. Time to go full touch and leave physical keyboards where they belong: in the past.
post #31 of 38
Palm originally grew the Handheld market with PalmPilot in 1996 (following the Apple Newton) and now playing catch-up 13 years later with Pre (following the Apple iPhone).

Rubinstein must have an axe to grind to go against Apple (or maybe he thinks he has better ideas). Nevertheless he's competing against Apple, Google, Nokia, and Microsoft now.
post #32 of 38
Quote:
Originally Posted by Mac Voyer View Post

Why do we assume the Pre exceeded expectations? What were the publicly stated expectations? This is just marketing/pr speak. If the Pre had exceeded any expectations, they would be boasting about specifics. I think the iPhone killing Pre failed to meet expectations and what we are seeing is damage control.

They weren't saying that they exceeded Palm's expectations.

They exceeded the analysts expectations. That's what they were talking about.

Like when Apple exceeds the analysts expectations.
post #33 of 38
Quote:
Originally Posted by chronster View Post

It seems like every other day I hear something about the Pre and how it's coming along. I think as it's popularity rises, price drops, and development advances, the pre will definitely make a turn and start yielding some profits. By then, it might even be offered by Verizon as well.

I've seen estimates that Palm must sell almost 3 million a year at the original price to turn a profit.
post #34 of 38
Palm need to hurry up and take their phones global. It's the only way that they're going to turn in a profit.

However, that in itself is a problem. Palm isn't a strong brand in Europe and Palm is going to be entering a crowded marketplace.
post #35 of 38
Quote:
Originally Posted by chronster View Post

It seems like every other day I hear something about the Pre and how it's coming along. I think as it's popularity rises, price drops, and development advances, the pre will definitely make a turn and start yielding some profits. By then, it might even be offered by Verizon as well.

How long is this "coming along" going to take? What new and fresh paradigm will they implement for an App Store? Will they be introducing a radically new interface that will make the iPhone look like a 10 year old Star-Tac?

Unless Palm does something truly radical with the Pre it's really not going to go much further than what we're seeing now. If the iPhone didn't exist, the Pre launch would have seemed quite decent. But in light of the 3GS launch, the Pre was a non-event the likes of Y2K. When you compete against Apple, if you don't make a big showing early on, you've more or less lost. Palm isn't just battling Apple, it's battling Apple mindshare.

Palm needs a device that can make calls, plus turn water into wine and loaves into fish in order to truly stand out and become desirable. It was just "good enough" from the very start. And when you're in a market with Apple, "good enough" is never enough.
post #36 of 38
Quote:
Originally Posted by Quadra 610 View Post

If the iPhone didn't exist, the Pre launch would have seemed quite decent. But in light of the 3GS launch, the Pre was a non-event the likes of Y2K. When you compete against Apple, if you don't make a big showing early on, you've more or less lost. Palm isn't just battling Apple, it's battling Apple mindshare.

This is exactly the problem. All these companies want to compete against Apple to raise their profile. That is just plain stupid. If they want to be #2 or #3 in the market place, they should compete against #2 or #3. The Pre would have been a success story had they announced that their target was Android or WinMo. Instead, they set all of their marketing sights on the iPhone: a product they cannot come close to competing with for another ten years, if ever.

It is like a welterweight boxer insisting on getting in the ring with a heavyweight. It is stupid and deadly. It is as if they would rather get beat by someone they have no chance against than by someone their own size. If Palm loses to Apple, they are heroic; if they lose to Google, they are pathetic.
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post #37 of 38
Dumping the distractions is definitely necessary. It's never a good idea to send mixed messages to customers. The problem is, who would trust Palm at this point? The went from their own proprietary OS that they let rot on the vine. Then, they adopted their number one competitor's OS, Windows Mobile. Now they are back doing their own thing again. What's next, Android phones from Palm? With the financial situation they are in, I wouldn't invest in Palm based devices right now.

Also, with Palm dropping Windows mobile and HTC scaling back, Windows mobile would seem to be in big trouble. Microsoft will learn that it's partners will turn their back as soon as they have a better alternative (like Android). This will eventually prompt Microsoft to enter the phone hardware business much like they did with the Zune. After which, the rest of Microsoft's partners will abandon ship. I believe Microsoft's market share dropped from 14% last year to just 9% this year. Within a few months, the situation should be even worse. Windows mobile 6.5 isn't going to be enough to help them either. This of course reminds me of quotes from Ballmer just before Apple entered the market... something about "not a chance", etc.
post #38 of 38
Quote:
Originally Posted by another_steve View Post

Dumping the distractions is definitely necessary. It's never a good idea to send mixed messages to customers. The problem is, who would trust Palm at this point? The went from their own proprietary OS that they let rot on the vine. Then, they adopted their number one competitor's OS, Windows Mobile. Now they are back doing their own thing again. What's next, Android phones from Palm? With the financial situation they are in, I wouldn't invest in Palm based devices right now.

Also, with Palm dropping Windows mobile and HTC scaling back, Windows mobile would seem to be in big trouble. Microsoft will learn that it's partners will turn their back as soon as they have a better alternative (like Android). This will eventually prompt Microsoft to enter the phone hardware business much like they did with the Zune. After which, the rest of Microsoft's partners will abandon ship. I believe Microsoft's market share dropped from 14% last year to just 9% this year. Within a few months, the situation should be even worse. Windows mobile 6.5 isn't going to be enough to help them either. This of course reminds me of quotes from Ballmer just before Apple entered the market... something about "not a chance", etc.

A lot of people thought the Zune HD would be the Touch killer, with a Zune phone on the same platform to follow.

However, it appears that MS doesn't want to muddy their WinMo waters with another app wielding platform, so the Zune is obliged to kind of eke out a niche as best they can.

That is to say, the Zune HD is competing with...... WinMo. It's MS vs. MS and only one will survive.

So now we have to do the usual MS "just you wait till the pre-announced vaporware rolls into town, because buddy, that shit will kick ass and take names" waiting game. Meanwhile, more and more vendors are gong their own way with Android or rolling their own like Palm.

If WinMo 7 uses some of the Zune HD's UI bling, and MS gets some partners to build something to the HD's hardware quality, they might even have something competitive to offer. But by that time will there even be an opportunity? That much further down the road into a world of iPhones and Androids and possibly the Pre, or a revitalized Nokia, or a polished up Blackberry.

But, honestly, I don't hold out much hope that much of the Zune's sexiness will survive being put through the MS backwards compatibility/IT first mill.
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