The company that started the PDA revolution 14 years ago is now on the brink of going bankrupt or being taken over. Palm has just released their Quarterly financial report to the Securities and Exchange Commission and it sent shock to investors. The company has been losing money since 2008 but the 3rd quarter results for the year 2010 are even worst. Palm reported a $110.8 million loss from total revenues of $343.93 million. Wall Street was greatly disappointed by Palm’s deteriorating performance. It already lost $753.47 million dollars for the fiscal year 2009 ending last May 31 of last year. Experts are already predicting it may not have enough money to operate independently until the end of 2010. But the Palm management is still optimistic about its future that may now seem bleak and hopeless.
Palm chairman and CEO Jon Rubinstein said, “Our recent underperformance has been very disappointing, but the potential for Palm remains strong. The work we’re doing to improve sales is having an impact, we’re making great progress on future products, and we’re looking forward to upcoming launches with new carrier partners. Most importantly, we have built a unique and highly differentiated platform in webOS, which will provide us with a considerable – and growing – advantage as we move forward.
In response to critics, Rubinstein pointed to positive reviews of their Palm Pre Plus and Palm Pixi Plus smartphones. In fact his company shipped over 960,000 units for the 3rd quarter which is 23% better than the previous quarter. However, he explained that due to the highly competitive market, the phones weren’t selling as well as they expected. The current global recession has also dampened the public’s interest to spend.”
He did explain that they aren’t giving up and his company is making steps to make things turn around, such as better training at the retail level so that sales associates have the expertise they need to sell Palm smart phones to customers. Furthermore, they have intensified their marketing efforts, which includes a new TV ad that’s debuting during March Madness basketball games.
Palm is obviously having a hard time making a name for itself in a cutthroat smartphone market that is already led by Research in Motion and Apple, makers of the Blackberry and iPhone. Things even got harder when Google introduced its Android OS which ushered in more competition. Palm’s webOS has not gained as much popularity as the open source Android. Consequently, Palm phone sales were overshadowed by high-profile Android phones like the Motorola Droid which sold millions of units last year.
The company is evidently very vulnerable right now. If the losses keep piling up, then Palm should be ripe for a takeover from a bigger company. Stockholders will not sit on passively and watch the company die in bankruptcy once they run out of money to operate. In spite of its recent misfortunes, Palm is still valuable because of its various patents especially with those concerning the webOS platform. Google, Microsoft, and Apple have billions of cash lying around and they might just rescue Palm. I put my bet on Microsoft, their Windows Phone 7 Series OS is still young and worth discarding for the much more powerful webOS.