Lower than expected sales of the Pre on launch weekend cause shares to slide.
Shares of Palm shrugged off the company's wider-than-expected quarterly loss Friday as analysts focused on the expected launch of the new Palm Pre smart phone.
PALM expects Q2 revenue to be down 57% from the year-ago period ($195 million in the upcoming as opposed to $349.6 million a year ago). It also announced a U.S. job which will help decrease its expense (which it seeks to cut 20%).
Apple's new 3G iPhone sold 1 million units in just 3 days, making it one the largest consumer eletronic launches in history.
Revenue dips at palm, and the company swings to a loss.
the IDC research indicates that palm has 13.4% share
Palm Inc announced that it expected earnings of 8 cents per share on $380 million sales. These estimates were below analyst expectations (profit of 9 cents and sales of $411.3 million). This resulted in a decline in the company’s stock price in the early hours of trading.
Morgan Keegan expects the strategic focus of Palm Inc. to improve. The sales at Palm’s Sprint Nextel Corp. stores have been strong, and new product launches are expected to compensate for weakness in AT&T Inc. These indications along with a rating upgrade from ‘Market perform’ to ‘Outperform’ by Morgan Keegan led to an increase in the share price, which was down by 15 percent in the last three months.
Lehman Brothers downgraded its rating for Palm from ‘Equal Weight’ to ‘Underweight’ and reduced its target price to $12 from $13, stating that the demand has decreased for the company’s key Treo products and there has also been an increase in the competition. Further, low sales through AT&T, Inc. are expected to negatively affect Palm's fiscal Q1 performance.
In what can best be described as a "partial buyout", private equity firm Elevation Partners purchased a 25% stake in Palm. A $9 dividend, funded by cash and Elevation's investment, will be issued to shareholders .