Doesn't look good for RIMM: -->
Palm cuts prices to deal with product glut
By Ian Fried
Staff Writer, CNET News.com
April 11, 2001, 9:15 a.m. PT
SANTA CLARA, Calif.--Faced with a glut of its handhelds, Palm is chopping the price
of several of its older models.
Palm is cutting the price of its Palm Vx from $349 to $299, after having already trimmed the
price last month with the announcement of two new models, the m500 and m505. The
company is also cutting the price of its low-end m100 to $129 from $149 and is making
permanent a $30 discount on its Palm IIIc, bringing the older color model to $299.
The moves were announced Wednesday at Palm's analyst meeting here.
Palm is faced with the prospect of an additional $200 million in inventory piling up this quarter,
based on current demand. That's on top of $100 million in inventory the company had on its
books at the end of last quarter.
Chief Financial Officer Judy Bruner said that cutting through the inventory and managing Palm's
cash is the company's No. 1 focus. The company has forecast that its unrestricted cash could
be cut in half this quarter because of the inventory pileup, along with a projected operating loss
of $80 million to $85 million.
Bruner reiterated that Palm will look to free the $238 million in restricted cash tied up in plans
for a new headquarters in San Jose, Calif.
The company also responded to criticism that some of its problems can be traced back to its
decision to unveil the m500 and m505 long before the products were ready to ship.
Chief Marketing Officer Satjiv Chahil said the company knew competitors would be announcing
products at the time and wanted to be able to announce the products to the international
market at the CeBit trade show in Germany.
"We didn't want the perceived leadership to shift away from us," Chahil said.
Palm executives also said the company is looking to renegotiate component contracts to
cancel and delay orders where it can, and to cut the costs of making its products.
"Even a dollar saved on packaging translates into millions of dollars," Chahil said. "Anywhere
there is room to save a penny we are looking at it."
Chahil even noted the rather modest setup at the analysts' meeting, the first since Palm
became a standalone company. "If you don't find this meeting very elegant, I don't apologize for
it," Chahil said. "We want to save wherever we can." |
