Palm stock dives after it cuts forecasts

Robert Clark
26 Feb 2010
00:00
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Daily News

Palm’s ability to reestablish itself as one of the top device firms is in doubt after it admitted sales were well short of forecasts.

Palm’s stock on Nasdaq dived yesterday after the company revealed full year sales would be “well below” the $1.6 billion to $1.8 billion it had expected.

Its quarterly forecast of $300 million to $320 million was well below the average analyst estimate of $424.7 million, the New York Times reported.

“Revenues for the quarter and full year are being impacted by slower than expected consumer adoption of the company's products,” Palm said in a statement. This had meant lower than expected order volumes from carriers and the deferral of orders.

“[D]riving broad consumer adoption of Palm products is taking longer than we anticipated," said CEO Jon Rubinstein.

Hopes for a revival of the once-dominant device firm rest largely on the Pre and Pixi, well-reviewed handsets based on the webOS platform that were launched last year.

But Palm’s US market share fell to 6.1% in the fourth quarter, behind all the other major OS platforms, according to ComScore.

Blogsite GigaOmsays the problem lies partly with its US partner Verizon, which has not marketed the device well, and speculates whether a heavyweight like HP, which is also struggling in the handset sector, will buy the company.

Palm, owned by equity firm Elevation Partners, still has more than $500 million in cash and equivalents.

Its stock on Nasdaq closed 19.28% lower at $6.53.

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