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Palm Shares Fall By More Than 20 Percent After Bleak Outlook

Shares in PDA pioneer Palm have tumbled by more than 20 percent to less than $4.50 after the latest forecasts and details about the sales of the company's flagship smartphone, Pre, leave observers worried about Palm's very future.

The third quarter of the financial year proved to be particularly difficult for the smaller smartphone company as it failed to provide with a follow up to its critically acclaimed Palm Pre.

The phone, which is already 15 months old, is still Palm's flagship device in a period that saw the arrival of dozens of new smartphones including a significant army of Android-based models.

Palm says that it made a lost of $22 million for the past quarter which is still significantly better than the $98 million it lost in the same quarter in 2009. Investors it seems have lost faith in the company whose market capitalisation is now just over $750 million.

Sales figures are equally dismal. It sold only 408,000 Palm handsets to its customers although nearly a million were shipped to partners which means that Palm needs to sell more than half a million phones somehow. Sales were down by 29 percent compared to the previous quarter of 2009.

We reported a few days ago how O2 had quietly started to sell the Palm Pre on £25 monthly contract, a significant reduction from the original £44 per month. A lack of demand is almost certainly the main reason behind the move.

Our Comments

As one observer noted, Palm is now almost primed for a takeover. Expect potential suitors - or at least the first rumours - to come just after the new financial year begins. We expect either Dell or a Taiwanese company, Acer or HTC maybe, to come up and alleviate Palm's lingering pain.

Related Links

Palm reports dire numbers and is up for sale (opens in new tab)

(TelecomTV)

Palm Sales Plunge 29% (opens in new tab)

(Informationweek)

Palm Stock drops another 18% today (opens in new tab)

(I4U)

UPDATE:Palm Shares Tumble On Disappointing Outlook,Phone Sales (opens in new tab)

(WSJ)

Palm losing cash hand over fist (opens in new tab)

(Techwatch)

Désiré Athow
Désiré Athow

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at ITProPortal.com where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.