Analysts get antsy, start making calls on Pre success 20
Mon, 17 Aug 2009 3:26 pm EDT 
Ah, analyst estimations, how we missed your vague guesses so. At long last, the analysts have started rearing their heads about Palm (again), this time with Ashok Kumar of Collins Stewart and Ilya Grozovsky of Morgan Joseph issuing calls that amount to the coming death of Palm.
As quoted in Barrons, Kumar states that “momentum appears to have already peaked” and that Palm has cut production levels on the Pre for the rest of the year by 500,000 units. How he knows this, he does not say. Of course, this would be a very puzzling move, as Palm has planned launches in Canada, Australia, and Europe by the end of the year, and will be moving the Pre onto other US carriers early next year. It is worth noting that Kumar has been consistently negative on the Palm and the Pre, and doesn't even formally cover the stock as part of his roll at Collins Stewart.
And then there Ilya Grozovsky’s rating of PALM shares as a ‘sell,’ with the low low low target price of $7.50 (from a Thursday close at $13.55). Grozovsky’s unspecified checks indicate Pre sales in July were down to 100,000, half his estimate of 200,000 for June, and that sales thus far in August will end up even lower than last month. In total, Gozovsky is now expecting that Palm will move 350,000 Pre phones in this quarter, a cut of 50,000 from his previous estimates. He believes that the low numbers that Palm and Sprint have sold thus far may result in price cuts before this year’s holiday season, with concessions being made by Palm on the per-unit price to make up for Sprint’s hefty subsidization.
Of course, all of this analyst guesstimation could very easily be solved if Sprint and Palm were to just come out and tell us how many Pre phones have been sold. At this point, we won’t be too disappointed if it’s not a zillion units, just so long as we have a number.
20 Comments
Dear Palm-
Time to supply the troops with some new ammo. People want to love the Pre. We Pre owners want to believe we weren't suckered into buying the last new device made by Palm (like the haters claim). We love the good stuff about the Pre (web, phone service, keyboard, Nav, WiFi) and want to believe you care about the things we still need, and that you'll be fixing the things we're complaining about. We're going on 3 months and we need something more from you to help us fight off the growing negative press. Any info in these areas would help...
How many Pres have been sold?
When will the apps start flowing?
What priorities are you working on? --
Do you care that the calendar stinks, the task program is weak and buggy and the memo program is a joke, or does that stuff not show up on your radar? Do you hear people clamoring for video? Do you care about the legacy Palm owners being able to use their data on the Pre?
What target market are you chasing? Who the heck do YOU think the Pre is designed for?
It seems like you want iPhone fans. Is that wrong? Have you defined some niche that's not being served well by Apple or RIM that you're chasing?
Give us something. Please. The silent treatment only works for so long.
Nice. You have given life to the thoughts in my mind. You also must have more patience than I do in waiting for these to be answered :)
Remember: You can't spell "analysts" without the ANAL!!!
Palm can kowtow to the stock market all they wish (and as they should), but the other part of the equation is that they need to have things to sell that people want. They took a huge gamble in killing off the Treo line and leaving solid customers to put up with Centros or move over to the dark side of M$'s OS if they don't want Pres. Since the Pre uses a third, unproven OS with little software except the included invasive "cloud" stuff and some "classic" compatibility - it's a huge gamble.
I was looney enough to buy every Treo update since the 600, and nearly a new PalmOS PDA every year before that going back to 1997. But this WebOS offers me little that I need, and takes away many things I rely upon. Sprint gets no new contract lock, and Palm loses 5 sales just with me. Multiply that by the Frankengarnet-faithful and that's a lot of losses.
As usual, I wish Palm well in getting their act together. But once again, true to form, they have ignored the needs of a large segment of people that actually buy and use their devices. You gotta expect that eventually the analysts would notice that not everyone is drinking the Kool Aid on the Pre and WebOS as it presently exists.
A solid "Classic" emulator with full Desktop sync should have been "Job One" for Palm before they even announced the WebOS. Devices without Applications are easily replaced by the next shiny thing.
i think you make a some good points specifically saying people need to pressure palm. Sadly when i've brought up that in places i've found many pre owners just don't want to hear criticism of anything related to Palm or the Pre. Not like in bug identification but saying hey palm needs to fix this it's the kinda of thing that loses customers or deters people. like those horrible ads they put out.
I am SO glad I took Motley Fool's advice and did not invest all my money back when Palm was selling for $4.00 a share! I won't even check to see how much it is selling for now. It would make me nervous to find out how much money I would have lost had I not taken their advice.
I can't think of much good Palm news in the past month so when that happens you're going to get negative speculation. If they were releasing positive news every week there wouldn't be spectulation. And developers conferences and homebrew apps are fine for the techies but not the mainstreamers. And they don't qualify as the sort of news that will move investors.
I swear, these analysts must get college degrees in how to be amazingly stupid.
In the world of technology, there are two kinds of target audiences: Early adopters, and mainstream buyers. There are two phases to a post-launch: early adopters, where you see a big run on devices, followed by a substantial lull during which marketing and word of mouth begins to take its effect and force mainstream buyers into making decisions. Then, after a wind up followed by a couple holiday seasons, when people give more expensive phones as gifts, it picks back up. Especially if you can generate enough expectation that your phone will be available on some customer's existing service, so that they don't have to switch services and deal with that hassle to get the phone they want.
There are still a lot of people who won't buy a Pre because they're locked into 2 year contracts. That's the simple fact. When that contract expires, they switch or, if the phone comes to their provider, they upgrade their phone. It takes time. I didn't see a whole lot of iPhones in the wild at the start, either. It took a year or two.
The reason this commenter is holding on to his Treo 700p has nothing to do with the Pre and everything to do with Sprint. As soon as they let me buy a Pre and keep my current plan, which I've had since 2002, then I'll buy one. I have no interest in moving to an "Everything" plan and basically paying twice as much for exactly what I have now -- 2000 minutes per month between three phones, unlimited data on two phones and 500 texts on one, with 300 on the other two, for a combined grand total of $100 per month. A fantastic phone is just not enough incentive to incur the much higher, recurring, fees under an Everything plan.