Palm: 'Slower Than Expected Consumer Adoption' Of WebOS - InformationWeek

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2/25/2010
10:47 AM
Eric Ogren
Eric Ogren
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Palm: 'Slower Than Expected Consumer Adoption' Of WebOS

If things looked bad earlier this week for Palm, they look worse now. Palm updated its guidance for the current quarter and the numbers have been revised downward. The new numbers will be "well below its previously forecasted range of $1.6 billion to $1.8 billion."

If things looked bad earlier this week for Palm, they look worse now. Palm updated its guidance for the current quarter and the numbers have been revised downward. The new numbers will be "well below its previously forecasted range of $1.6 billion to $1.8 billion."In a statement today, Palm CEO Jon Rubinstein said, "Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today, and our work to evolve the platform and bring industry-leading technology to market continues."

"However, driving broad consumer adoption of Palm products is taking longer than we anticipated. Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products."

In its guidance note, Palm revised its revenue forecasts down to between $285 and $310 million. Analysts were expecting Palm to deliver $410 million. That's a significant shortfall.

Canaccord Adams analyst Peter Misek said that neither the Pre Plus nor Pixi Plus are selling all that well at Verizon Wireless. They went on sale there last month. Misek believes sales are less than 50% of what was expected. Verizon Wireless and Palm may have to re-approach how they are marketing the webOS devices.

Several days ago, Bank of America/Merrill Lynch analyst Vivek Arya wrote in a research note, "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. With only $130 million of net cash in an opex intensive space, Palm's options may be limited in our view."

Palm needs to generate some momentum in the market. The problem is, it is unclear how Palm can or will be able to accomplish that feat.

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