Analysts are predicting the possible sale of Palm after it
warned of falling revenue in the current quarter and revealed
poor sell through numbers in its latest results.
Palm chief executive Jon Rubinstein called the company's
performance deeply disappointing, adding Palm had launched a
fightback strategy aimed at strengthening its sales and marketing
Although Palm Inc. reported a narrower quarterly loss in its
latest results the Californian-based company continues to
struggle against competition from bigger rivals.
Palm's revenue rose to £250.55 million in its fiscal third quarter
ended Feb. 28, from £59.70 million a year ago. The company's
net loss narrowed to £14.50 million, compared with a loss of to
£64.57 million, a year earlier.
However Palm warned that revenue in the current quarter ending in
late May would fall to less than £98.83 million. Although that is
up from £74.59 million a year earlier, it is significantly below
the £201.49 million projected by analysts.
Palm shares were down 14% at £3.20 in after-hours trading. The
shares have fallen by more than half so far this year.
Chief financial officer Doug Jeffries called the current quarter
an exceptional situation in which Palm has to reduce the buildup
of excessive inventory. Palm said it shipped 960,000 smart phones
in the latest quarter, but only sold 408,000 devices to consumers
due to declining sales of its older devices and a slowdown after
the holidays. That leaves about 552,000 phones in stores that the
company still needs to sell.
Ben Wood, analyst at CCS Insight, said: 'Their sell through numbers
are a bit of a shock there is quite a substantial inventory
building up which means everything backs up.
'It is interesting to see management remains optimistic for the
outlook with more handsets and broader distribution planned.'
He added: 'However there is lots of speculation about whether
someone will buy Palm and that still cannot be ruled out.'
Palm did not dismiss the rumours this week. Asked by analysts if
a sale was on the cards Rubinstein declined to comment beyond
saying the board would look at any 'reasonable offer'.