Palm picture mixed, outlook uncertain

Palm Inc.’s revenue for the first fiscal quarter just ended was flat and the company lost about $40 million, vastly beyond losses in the year-ago quarter.
While Palm said it shipped 1 million smartphones in the last quarter, up nearly 50% from the year-ago quarter, it also said its Centro handset – the volume hit that lent its future plans credibility – had peaked in August.
Palm’s stock dropped nearly 7% on the news, to about $7.90 in midday trading.
Nonetheless, CEO Ed Colligan declared himself “pleased with our momentum.”
It may be a measure of the company’s troubles that Global Crown Capital L.L.C. could characterize the quarter as “very strong,” based on unexpectedly strong revenue and unit sales.
However, analyst Pablo Perez-Fernandez at Global Crown Capital wrote today that “we believe the company could suffer from a disappointing revenue trajectory from now until Nova-based handsets take off.” “Nova” is the working name of Palm’s new smartphone platform that is to supercede the Treo line, but it is not expected to launch until next year.
Perez-Fernandez also noted the new Treo Pro is an attractive product, but will launch without major carrier support in the United States, against a slew of high-end devices expected at the top-tier carriers in the fourth quarter and beyond.
“We believe that Palm has once again underestimated competitive forces, poorly timed product transitions and over-estimated the staying power of its product based on factors such as pricing that are not sustainable competitive advantages,” Perez-Fernandez wrote. “We have observed this same exact pattern of corporate behavior time after time since Mr. Colligan took over as CEO.”