Home & Office

Palm: WebOS will expand beyond its Pre base

Despite reporting dismal quarterly results, the company's CEO says it is on track to launch the Pre on time, and plans a WebOS ecosystem that goes 'well beyond our base'
Written by Larry Dignan, Contributor

Amid weak fiscal third-quarter results, Palm chief executive Edward Colligan on Thursday said the company is well positioned to launch the Pre and promised a roadmap of smartphones and an application ecosystem built on the company's new WebOS.

Palm did not put a date on the Pre launch, but said the device and its software were "being polished up" and certified from Sprint as the company prepares to ramp up manufacturing.

Chief financial officer Doug Jeffries added that "there's an enormous amount of interest globally for the Pre". Palm execs did not detail European partners, but did note that the Pre plan calls for a step-by-step addition of international partners. "Right now we're 100 percent focused on getting the Pre launched and the Sprint product out the door," said Jeffries.

On a conference call with analysts, Colligan provided an upbeat tone to what were predictably weak results. The company reported a net loss of $98m, or 89 cents a share, on revenue of $90.6m, down from $312m a in the same quarter a year ago. Smartphone revenue fell 72 percent to $77.5m.

"With these financial results it's easy to forget the progress we've made," said Colligan, who argued that, strategically, the company is on track.

Colligan said the company is well positioned to launch the Pre on time. "We are under no illusions about the hard work that remains with bringing the Pre to market", said Colligan, adding: "I have never had more confidence in Palm's ability to bring a new product to market on time and at scale".

However, analysts asked Palm executives what made them comfortable that the Pre would launch on time. After all, the Treo Pro was delayed. Jeffries said Palm has been working "more collaboratively" with Sprint, and that the company has understands the process to launch. "It's never a slam dunk, but I'm as comfortable as I have ever been that we'll nail it," said Jeffries.

Colligan delivered the following points:

  • The company needs seamless execution on the Pre launch
  • Palm is "working hard with developers to get applications ready at launch" and "aligning marketing efforts with Sprint"
  • Palm was not prepared to disclose a European partner for the Pre, but the company has some "excellent options"
  • The company plans to establish a WebOS ecosystem that goes "well beyond our base"
  • Palm was not going to discuss its cash-burn situation in the fourth quarter, but said its latest move to raise capital gave the company enough headroom to launch the Pre

Jeffries said the company's cost cutting and the launch of the Pre — along with its WebOS — will "greatly improve" performance.

Indeed, Palm will need the improvement. Palm smartphone units plunged 42 percent to 482,000 in its fiscal third quarter ahead of the launch of the Pre.

The results were largely expected since Palm had already warned that its third quarter results would be messy. The company in a statement said it is officially "proceeding through a challenging transitional period" ahead of the Pre launch.

If successful, the launch of the Pre will create a new era for the company, but if it fumbles Palm could be in difficulties.

The third quarter net loss included a bevy of items, but even under non-Gaap accounting Palm lose $94.7m, or 86 cents a share. Inventories for the third quarter were $13.2m, up from $8.89m in the same period a year ago.

On the bright side, Palm recently raised capital that largely offset what it blew through during the third quarter. The company ended the third quarter with cash and equivalents of $219.4m. Jeffries repeatedly noted that Palm had enough capital to give the Pre the marketing support it needs.

Editorial standards