What Palm's Sorry Sales Really Mean

Illustration for article titled What Palms Sorry Sales Really Mean

Palm's results for last quarter are out, and they're grim. Not as grim as Palm had warned, but still: yikes. What does this mean to you, loyal Palmsters? It means your beloved company—and its phones—might get gobbled up.

When a quarterly report requires a heads-up, like this one does, the news can't be great. And it wasn't. Palm lost $22m last quarter, which isn't huge money for a company with revenues of a few hundred million, but is pretty serious for a company that's still in recovery mode. They shipped 960,000 phones this quarter (again, OK), but only about 400,000 of them actually sold to customers—30% less than last quarter.

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CEO Jon Rubinstein's stickin' strong:

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.

And he's right: webOS is the most valuable thing they have—in a buyout scenario. Of course, he wouldn't discuss the prospect of a buyout during today's earnings call, at all.

Palm's running out of options as Palm. And the possibility of a buyout isn't just a tech world fantasy, or armchair economic analysis: Apparently, the few Wall Street analysts who've stuck with Palm through the last six months are starting to bail, and the last remaining holdouts are literally banking on a buyer to save the day.

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A Palm buyout could mean a lot of things, from a transparent absorption into a company that needs a cellphone presence (HP?) to an integration into an existing line (RIM?) to a full on cannibalization for intellectual property (Google?). The question now is less of an if than a when, and less of a when than a who. Place your bets in the comments. [Palm]

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DISCUSSION

Apple /Google/MS will never buy them...it'd be a waste of money.

I don't think that webOS is particularly valuable to a mobile market newcomer...it's a failure right now and HP or whoever is thinking of getting in the market won't want a re-tread OS rebranded to whatever.

What a newcomer to mobile needs is a concept or a vision of what they want their mobile OS to be - then they go poach Palm engineers and designers and make it happen. Either that or they make overwhelming offers to Google/Apple folks....but there's such a cult of personality at those 2 companies that I don't see that happening.

All that being said, I don't think HP or Dell is coming to the mobile party. Apple and Google have got the market on lockdown to the point where WinMo 7 is looking like the odd man out. It doesn't make good business sense for them.