Palm Rubbing Their Palms in Their Eyes

palm_prePalm’s latest results are in and it doesn’t look great.

Link to PreCentral.net

“Non-GAAP Adjusted Revenues in the second quarter totaled $302.0 million, non-GAAP Adjusted Gross Profit was $77.3 million and non-GAAP Adjusted Gross Margin was 25.6 percent.”

“The company shipped a total of 783,000 smartphone units during the quarter, representing a 5 percent decrease from the first quarter of fiscal year 2010…”

“Non-GAAP Net Loss for the second quarter of fiscal year 2010 was $(59.6) million, or $(0.37) per diluted share.”

It really doesn’t greatly matter how much better than previous years this was, the fact is that Palm continues to hemorage money!

By my super simple math skills Palm would need to sell 19.7% more phones (all else being equal). That would be 937,526 phones. I don’t see that happening in the near future at all. Obviously their trending is downward, which makes sense after the initial hype with a new product launch.

Certainly, it is admirable that Palm has been able to do this well already but they are just not properly structured to continue the way they are. In my example above that only gets them to breakeven; doesn’t get them to the point of making profit and paying down past debt.

Palm doesn’t seem to have any plans for releasing new products, so any increase in sales is going to have to come from new carrier partnerships and make up for the sliding demand on Sprint.

I truly want WebOS to make it but I don’t see that happening with Palm. There needs to be a complete structuring of the company or they need to look for a buyer. While they still have money in the bank from their equity offering they will be through that this year if they can’t make significant changes in time.

Maybe they should set up a Paypal tip jar. I hear that works for Leo Laporte. :)

About Darren Humphries

Darren Humphries has written 78 posts on Mobile Jaw..

Editor, MobileJaw.com Microsoft MVP (Windows Mobile)

  • http://twitter.com/mobilejaw/status/6776485640 MobileJaw

    Palm Rubbing Their Palms in Their Eyes – http://tinyurl.com/y8rmtgb

  • http://twitter.com/miketemporale/status/6776656406 MikeTemporale

    Palm still has that name. Worth somethinng right? RT @MobileJaw Palm Rubbing Their Palms in Their Eyes – http://tinyurl.com/y8rmtgb

  • http://twitter.com/darrenhumphries/status/6796325131 Darren Humphries

    RT @MobileJaw: Palm Rubbing Their Palms in Their Eyes – http://tinyurl.com/y8rmtgb

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  • http://www.MobileJaw.com Mike Temporale

    Poor Palm. They just can’t seem to catch a break. The Pre is a nice looking device, but doesn’t seem to be bringing in the revenue that they had hoped.

    I get a kick out of their commercials – the only smartphone that allows multitasking. Huh? So what do you call what Windows Mobile and Android are doing? Microsoft should create a commercial that highlights “Been doing that since 2000″. :D

  • http://www.twitter.com/DarrenHumphries Darren Humphries

    Haha! That would actually be a good idea but MS seems to almost shun advertising Windows Phone.

  • http://www.twitter.com/DarrenHumphries Darren Humphries

    BTW, something that sounds truly horribad to me; they increased the number of phones they sold this quarter by 41% compared to last year same quarter but their revenue decreased 58%. Uhhh…Palm has some serious problems going on.

  • http://www.MobileJaw.com Mike Temporale

    How can you sell more but make less?

    I’m guessing that means they cut the price pretty hard and pretty quick in the products life cycle in order to get more units out the door. Understandable from a “move the hardware” point of view. But not from a “we need money to pay bills” point of view.

  • http://www.twitter.com/DarrenHumphries Darren Humphries

    Obviously the mragins on the Pre are super thin! They are in a real pickle in that case. If may have no wiggle room to lower the price to incent people to buy and if they certainly can’t raise the price.

    They are sticking with the current hardware, obviously because as they pump out more of the same model the costs go down compared to starting a new unit. Unfortunately they current hardware is what is slowing them down. If just needs more oomph.

    They should keep the current hardware design but throw in a faster processor and more memory. Call it the Pre II or Post Pre or Pre Revolution or…ya, I’ll stop now. :)

  • http://twitter.com/darrenhumphries/status/9929204292 Darren Humphries

    Looks like my predictions about Palm back in December were correct: http://ow.ly/1dIZW