You'd Be Crazy to Buy a Palm Now

Illustration for article titled Youd Be Crazy to Buy a Palm Now

Palm is dying. They've been hemorrhaging money since late last year, and yesterday's woeful earnings announcement sealed its fate. It didn't have to be this way. But it's been coming for a long time.

Palm's got great hardware, and WebOS is a genuinely terrific operating system. But that's not enough anymore. While Android's got a plethora of hardware partners, Palm's trying to go it alone in a vertically integrated world. It's a numbers game, really: Palm owners have 2,000 apps available to them. The Android Marketplace has fifteen times that, and the iPhone's got 150,000. If developers have given up on WebOS—which it certainly seems like them have—consumers have no reason to stick around. Especially given that the more money Palm loses, the harder it becomes for them to innovate on the hardware or the software side.


So Palm's got great guns, they just don't have any ammo. This isn't a new revelation; John called it back in October, when it was first clear that Palm was being squeezed out by the combination of Android and iPhone. What's different today is that the financials have finally caught up to the facts.

Palm CEO Jon Rubinstein offered up his own rationale during yesterday's call, blaming his company's demise on timing:

"If we could have launched at Verizon prior to the Droid, I think we would have gotten the attention the Droid got. And since I believe we have a better product, I think we could have even done better."


Easy to say, impossible to prove. And even if Droid stole some of Palm's thunder, that's nowhere near the totality of the company's problems.

If yesterday's earnings call put Palm on life support, its grave is being dug by Wall Street, with analyst Peter Misek handing out the shovels. Misek's prediction today that Palm's stock price would hit zero within twelve months is the kind of headline-grabbing, self-fulfilling prophecy that makes me not like analysts very much. It's also effective: Palm shares are already down 25% today. And while that could make it a more attractive buyout target for Google or whomever else, that kind of transaction takes the kind of resources and time that Palm may not have.


So where does that leave Palm? Bleeding out, with more than a million phones sitting in their inventory waiting not to get sold.


And where does that leave you? If you're smart, running as far as you can in the opposite direction from Palm, knowing that once a company dies the customer support dies with it, along with any third party or internal development. Running, and lamenting the passing of the last great indie phone maker.

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You know what? Fuck you Gizmodo. They're far from "hemorrhaging money." They lost money, but even if they continue losing money at the same rate, they have enough funds in reserve to stick around for a while.

Additionally, they'd be crazy not no release a new phone this summer, since the hardware in the Pre is already growing rather long in the tooth (processor runs stock at 500Mhz).

Since they've said they're sticking to physical keyboards, and they already have a candybar phone (Pixi) and a portrait slider (Pre) the only thing left is a larger landscape slider (they've been progressively adding better and better landscape support to the OS for the pas two releases), which is what everyone's been clamoring for.

Additionally, their PDK allows iPhone games and apps to be ported easily to WebOS, which is steadily increasing their app count as well as the number of high quality games and apps.

They can either try to make another incremental upgrade like the Plus series (which would likely fail) or burn through their remaining capital to make and market better hardware (which might actually have a decent chance of success).

Before they announced the Pre, their shares were worth roughly $1. Even after all the horrific goddamn news of the past few weeks, they've only bottomed out at $4 thus far.

And they still have just shy of $600 million in capital and assets at their disposal. They already have a solid OS (arguably the tough part of entering the smartphone market) and now just need better hardware for it to run on. This past quarter they lost $22 million, the quarter before that they lost $86 million. So they're slowing the drain on their accounts and still have enough cash to keep going. Even if the next quarter finds them STILL losing money, they're STILL not dead.

So Gizmodo, please, do us all a favor, shut the fuck up. At this rate I'm expecting you to run the headline "Dewey Defeats Truman" tomorrow morning...