Palm’s reboot is under way, but it has yet to prove that it can turn around its fortunes.
Palm, which makes smartphones like the Pre and Pixi, said Thursday that its sales declined slightly from the previous quarter, although they were still up sharply from a year ago.
The company trimmed its net loss and said it had shipped a total of 783,000 smartphones to retailers in its fiscal second quarter, which ended Nov. 27. That was up 41 percent compared with the second quarter last year, but down 5 percent compared with the first quarter.
Over all, the company’s revenue and profit fell below Wall Street’s expectations. Furthermore, an important measure of customer interest in its phones, the sell-through rate, suggested that its new devices were not flying off retailers’ shelves. Palm said customers bought 573,000 units, down 29 percent from the first quarter and down 4 percent year over year.
“We’re still in the early stages of a long race,” Jonathan J. Rubinstein, chief executive of the company, said in a statement. For the second quarter, the company reported a net loss of $85.4 million, or 54 cents a share, compared with a loss of $508.6 million or $4.64 a share, in the same period a year earlier, which included a charge for a tax provision.
Because of a change in the way the company recorded revenue for its newest phones — during the fourth quarter, it began spreading revenue and expenses over a two-year period — it reported two sets of quarterly results Thursday. Adjusting for the deferrals, revenue was $302 million, compared with Wall Street expectations of $266.2 million, according to a poll by Thomson Reuters, and the loss was 37 cents a share, compared with a consensus forecast of a loss of 32 cents a share.
Using the same type of accounting adjustments, the company would have reported revenue of $191.6 million and a loss of 73 cents a share in the same quarter last year.
Investors appeared to react negatively to the news, with shares declining more than 8 percent in after-hours trading.
Shaw Wu, an analyst with Kaufman Brothers, said that Palm’s biggest challenge will be getting consumers and carriers to choose its product over many rival smartphones.
“The issue is not the product. The big concern for investors is Palm’s current lack of profitability,” Mr. Wu said. “Palm needs to focus on their operations and introduce more carriers to have broader distribution.”
Mr. Wu estimates that Palm could ship as many as 3.86 million smartphones in the fiscal year ending in May 2010.
The company has high hopes that a sleek stable of smartphones running on its speedy new operating system, WebOS, would help revive its finances and reputation. Mr. Rubinstein acknowledged that Palm had faced competition from rival handsets, including the Apple iPhone, the BlackBerry devices from Research In Motion, and the Motorola Droid.
“We are investing heavily in marketing to drive better awareness of our products,” he said during a call with investors.
In June, the company introduced the Pre as the cornerstone its new lineup, to largely positive reviews. Recently, it began selling a slimmed-down version of the Pre called the Pixi. In the United States, both phones are available only for Sprint Nextel’s network.
Michael Gartenberg, vice president for strategy and analysis at Interpret, a market research firm based in Los Angeles and New York said that Palm had done better than expected, considering that the new WebOS phones have been on the market only a short while and with a single carrier. “They can definitely still carve out a space in the mobile game,” he said.
But he cautioned that the company would have to do more to capture market share in a crowded landscape. “Palm is going to have to sustain the velocity they started in 2009,” he said.
Contributing to Palm’s sluggish sales, analysts say, has been a dearth of applications, the quirky bite-size programs that can perform various functions like mapping or social networking, for Palm’s smartphones.
To help establish a thriving system for software developers, the company announced the public release of a tool called Project Ares that allows developers to create and release applications for the Palm Pre and Pixi through a Web browser. Palm hopes Project Ares will significantly lower the barrier to entry for mobile developers looking to write programs for WebOS, Mr. Rubinstein said.
“There is a big opportunity in front of us as a company,” Mr. Rubinstein said. “Ultimately, our success is around our execution.”
Source: nytimes | JENNA WORTHAM (Published: December 17, 2009)
Palm, which makes smartphones like the Pre and Pixi, said Thursday that its sales declined slightly from the previous quarter, although they were still up sharply from a year ago.
The company trimmed its net loss and said it had shipped a total of 783,000 smartphones to retailers in its fiscal second quarter, which ended Nov. 27. That was up 41 percent compared with the second quarter last year, but down 5 percent compared with the first quarter.
Over all, the company’s revenue and profit fell below Wall Street’s expectations. Furthermore, an important measure of customer interest in its phones, the sell-through rate, suggested that its new devices were not flying off retailers’ shelves. Palm said customers bought 573,000 units, down 29 percent from the first quarter and down 4 percent year over year.
“We’re still in the early stages of a long race,” Jonathan J. Rubinstein, chief executive of the company, said in a statement. For the second quarter, the company reported a net loss of $85.4 million, or 54 cents a share, compared with a loss of $508.6 million or $4.64 a share, in the same period a year earlier, which included a charge for a tax provision.
Because of a change in the way the company recorded revenue for its newest phones — during the fourth quarter, it began spreading revenue and expenses over a two-year period — it reported two sets of quarterly results Thursday. Adjusting for the deferrals, revenue was $302 million, compared with Wall Street expectations of $266.2 million, according to a poll by Thomson Reuters, and the loss was 37 cents a share, compared with a consensus forecast of a loss of 32 cents a share.
Using the same type of accounting adjustments, the company would have reported revenue of $191.6 million and a loss of 73 cents a share in the same quarter last year.
Investors appeared to react negatively to the news, with shares declining more than 8 percent in after-hours trading.
Shaw Wu, an analyst with Kaufman Brothers, said that Palm’s biggest challenge will be getting consumers and carriers to choose its product over many rival smartphones.
“The issue is not the product. The big concern for investors is Palm’s current lack of profitability,” Mr. Wu said. “Palm needs to focus on their operations and introduce more carriers to have broader distribution.”
Mr. Wu estimates that Palm could ship as many as 3.86 million smartphones in the fiscal year ending in May 2010.
The company has high hopes that a sleek stable of smartphones running on its speedy new operating system, WebOS, would help revive its finances and reputation. Mr. Rubinstein acknowledged that Palm had faced competition from rival handsets, including the Apple iPhone, the BlackBerry devices from Research In Motion, and the Motorola Droid.
“We are investing heavily in marketing to drive better awareness of our products,” he said during a call with investors.
In June, the company introduced the Pre as the cornerstone its new lineup, to largely positive reviews. Recently, it began selling a slimmed-down version of the Pre called the Pixi. In the United States, both phones are available only for Sprint Nextel’s network.
Michael Gartenberg, vice president for strategy and analysis at Interpret, a market research firm based in Los Angeles and New York said that Palm had done better than expected, considering that the new WebOS phones have been on the market only a short while and with a single carrier. “They can definitely still carve out a space in the mobile game,” he said.
But he cautioned that the company would have to do more to capture market share in a crowded landscape. “Palm is going to have to sustain the velocity they started in 2009,” he said.
Contributing to Palm’s sluggish sales, analysts say, has been a dearth of applications, the quirky bite-size programs that can perform various functions like mapping or social networking, for Palm’s smartphones.
To help establish a thriving system for software developers, the company announced the public release of a tool called Project Ares that allows developers to create and release applications for the Palm Pre and Pixi through a Web browser. Palm hopes Project Ares will significantly lower the barrier to entry for mobile developers looking to write programs for WebOS, Mr. Rubinstein said.
“There is a big opportunity in front of us as a company,” Mr. Rubinstein said. “Ultimately, our success is around our execution.”
Source: nytimes | JENNA WORTHAM (Published: December 17, 2009)
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