Palm: On track to become a historical footnote
Remember when Palm - maker of the Pilot and Tungsten PDAs and later the Treo smartphone - was the dominant player in the handheld device business? Today, it's a completely different landscape. Apple's iPhone has recently dominated the smartphone space. RIM is making a big push with the launch of consumer-friendly versions of the Blackberry. And Google has now entered the space with its Android operating system and the G1 device for T-Mobile. For Palm, pretty much a minor player these days, the future doesn't look so hot.
Today, the company announced preliminary results for its second quarter 2009, which ended Nov. 28. The short story: cutbacks galore - jobs in the U.S., operations in Europe and sales operations in Asia Pacific will head back to the U.S. The company said that, by the fourth quarter, expenses should be trimmed by $20 million from the Q1 levels.
The company said second-quarter revenue will be $190 million to $195 million, a significant drop from the $349.6 million a year ago. The company said the revenue drop is due to "reduced demand for maturing smartphone and handheld products" but went on to note that it is seeing "unprecedented dynamics in the global markets as economic uncertainty hampers demand for consumer products." Basically, the overall economy is hurting Palm, too.
A year ago, CEO Ed Colligan told investors that executives were "transforming Palm to exploit the market opportunity," Then, just last quarter, in a presentation during its first quarter earnings call, the company said one of its transformational goals was to "establish Palm as the leading innovator in the smartphone marketplace."
Given the buzz that's been generated around the iPhone, the G1 and the BlackBerry, I think it's fair to say that Palm has failed. The other devices, while fun to touch and interact with, were also innovative - delivering a touch screen experience, as well as a large number of apps and other mobile web features that kept both consumers and developers intrigued.
Shares of Palm were down more than 21 percent in regular trading, closing at $1.88. The stock continued its downward slide in after-hours trading, dropping almost 10 percent more to $1.70.