Palm Updates Stock Guidance Amid Stock Volatility and Slow Sales 106
After several days of crazy stock swings, Palm has issued a press release updating their investor guidance for for Q3 FY2010. In essence, it appears to be an admission that sales are slower than hoped:
[...] revenues for the third quarter of fiscal year 2010 will be in the range of $285 million to $310 million on a GAAP basis and in the range of $300 million to $320 million on a non-GAAP basis.1 Revenues for the quarter and full year are being impacted by slower than expected consumer adoption of the company's products that has resulted in lower than expected order volumes from carriers and the deferral of orders to future periods. Accordingly, Palm expects fiscal year 2010 revenues to be well below its previously forecasted range of $1.6 billion to $1.8 billion. The company will provide more detail on its financial results during Palm's third-quarter financial results conference call currently scheduled for Thursday, March 18.
In a quote in the release, CEO Jon Rubinstein added "However, driving broad consumer adoption of Palm products is taking longer than we anticipated. Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products." The release closes with Palm debunking a recent rumor that they had little cash on hand, claiming that they expect to end the quarter with cash and cash-equivalents totaling over $500 million.
The release comes a day after the Wall Street Journal reported (subscription required) on an analyst claim that Verizon "was 'evaluating the potential for destocking.'" It appears that article may have been a bit overblown as in the same piece Verizon spokeswoman Brenda Raney dismissed the report. Reached for comment, Raney told PreCentral "Palm devices are an important part of our portfolio as more and more people enjoy both the Palm Pre Plus and the Palm Pixi Plus on the nation's most reliable network."
As we briefly discussed in PalmCast Live on Tuesday (podcast coming soon), in recent weeks it seems as if any errant rumor has the potential to affect Palm's stock lately. We've long held here at PreCentral that Palm's single most important challenge right now is simply selling as many webOS devices as possible to help establish the platform as viable for both users and developers. Given Palm's statement today, that challenge isn't being met yet.
With luck, Palm's recent advertising push will help with that - although we're starting to think Palm is going to need new, high-end hardware to act as a 'halo device' for the platform. What do you think Palm needs to do to juice sales?