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Technology Stocks : PALM - The rebirth of Palm Inc. -- Ignore unavailable to you. Want to Upgrade?

To: lkj who wrote (1410)	8/28/2000 12:39:46 AM
From: David Howe	Respond to of 6784

Khan, Thanks for your feedback. I'm just starting to get up to speed on PALM and appreciate you and the others sharing their knowledge. Dave

To: lkj who wrote (1410)	8/28/2000 9:12:40 AM
From: David E. Taylor	Read Replies (1) \| Respond to of 6784

Khan: I think your $19-$20/unit figure for Palm's OS licensing fee is probably on the high side. In the following post: Message 14131491 I estimated HAND's unit sales for their Q4 (April/May/June) at around 345,000 units. Dividing that number into PALM's Q4 (March/April/May) licensing revenue of $3.4 million gives around $10/unit OS licensing royalties, assuming HAND was responsible for 100% of that income. Now the 2 quarters are out of line by a month, but even if you assume HAND's Q4 was back end loaded to the extent that they derived 50% of their revenues from June (their IPO month), and 25% in April and May, and you assume further that March (probably another back end loaded month) was flat with April/May, you can only get down to around 260,000 units for HAND for March/April/May (PALM's Q4). and that only gets you up to around $13/unit for PALM's OS licensing income from HAND. I think the difference between your $18-$20 and my $10-$13 is in your assumption of $200 revenue for each HAND unit sold, and my ASP of $135-$150 for each HAND unit sold. Your $200 number would seem to be closer to HAND's average retail price of $225. $10-$13 per unit would make PALM competitive with MSFT's OS if you're correct about them discounting 50% from their previous "mid to high $20's" In any event, I'm using $10-$13/unit for PALM's OS licensing revenues going forward in the PALM revenue/earnings model I'm working up. I'd appreciate your and others comments on my conclusions on this. David T.