Analysts expect Q2 results to match Palm's conservative guidance 7
At the end of last quarter’s financial results conference call, many analysts were taken aback by Palm’s prediction of lower sales for the quarter that is now drawing to a close. Palm’s stock has dropped some 30% in the last two months after strong launches by competitors on multiple networks, but now it’s looking like Palm’s expectations for their Q2 2010 results were mostly spot on.
Shaw Wu, a senior analyst at Kaufman Brothers, says that his checks through Palm’s supply and retail chain indicate that they’ve sold around 670,000 handsets in the past three months. Those 670,000 units include the Palm Pixi, but considering that launched just a few weeks ago, most of the 670,000 units are Palm Pre phones. The Pre’s higher price (Palm’s price to carriers, not the price charged by retailers) makes it the more lucrative of the two, and while Palm doesn’t break down their sales numbers by device, we expect they’re happy to have the Pre still selling well six months after its launch. While we aren’t certain what affect either event has had, the continuing price cuts for the Pre and the European launch on O2 no doubt blunted the expected US sales drop.
According to the Wall Street Journal, their survey of analysts revealed an average anticipated revenue for the quarter of $265.7 million. While that amounts to an increase of 39% over the same quarter last year, it still results in a projected loss of 32 cents a share, or $45 million total. Though any loss is not a good thing, it is considerably better than the 73 cents a share loss that Palm posted this time last year.
Where Palm goes from here results in mixed calls from analysts. Wu believes many investors have been “overly negative” and that Palm’s expansion onto new carriers in 2010 will help bolster the company’s success. On the other end is Tim Long of BMO Capital, who thinks that pressure from Android and poor response in Europe and to the Pixi “are creating challenges to Palm viability as a smart phone contender.” Who is right? We’ll find out on Thursday.
7 Comments
Shaw wu was way off last quarter...these analysts don't know anything.....Wall street is a joke.....the secondary was priced at 16.25 and Government Sachs was involved and yesterday the analyst stated 15 dollar target...way to screw your clients.......And the secondary was even more of a joke....I would love for the SEC to investigate that move
Must say I agree: I've come to loathe these analysts' predictions based on nothing more than speculation. How people make a career out of this baffles me.
To quote a friend: "the only metric worth ANYTHING is Palm's financial report. Everything else is mere speculation."
Now... saying Palm matches their analysis... does this mean they are on their planned track? In other words, is this a planned "righting of the ship" or is just slowing their demise the best they can plan for at the moment?
Only time will tell...
Any company whose stock goes from 1.99 in January to 11.86 in December, showing a 500% increase can
i agree but dont dismiss the bs 2ndary I am long but when you pull those shenanigans 16.25 and then 1 month a half a drop from 16.25 to 10 that is a joke
I expect a huge boost when the Pre 2 launches.
I agree with the general skepticism towards any analysts predictions of palm's (or any other company's) financials. My personal opinion is that most of these analysts are trying to move the market prior to the disclosure to benefit their own portfolios.
I do hope, however, that Palm is in line with the expectations they set in September. It will prove the that their executives are playing their numbers realistically and conservatively. While we would all love to see Palm go gangbusters, the slow and steady approach is an absolute neccessity for their long term success.
In terms of the stock, I'm sticking with my buy at $6 plan. Anything over that is just too expensive in a volitile market with a company who, while improving, is still on the edge. Yes, I realize that if Palm is successful, I will never see that price again, but I would still see an investment in Palm's stock right now as highly speculative.