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

To: pass pass who wrote (3734)	2/10/2001 9:06:52 PM
From: David E. Taylor	Respond to of 6784

Pass: Agreed. I just used it as an example of how these products aimed at the consumer market rapidly become commoditized, with the result that prices and margins shrink, and increasing sales volumes don't result in increased overall revenues. That's why it's so important for Palm to maintain its stranglehold on the handheld OS market, penetrate the smart cell phone market with the OS, and come up with ways to monetize its rapidly expanding user base to bring in recurring revenue streams from things like content and access services. For example, the low end M-100 retails for $139, Palm's ASP for this model is no more than $90-$100, and its net profit probably $10-$15 max - they get something in that ballpark in license fees for every Handspring, Sony or other Palm OS based device sold. If they double unit sales in the next 12 months and 25% of them are priced like the M-100's, that's 4 million units and around $400 million in gross revenues, but only $40-$60 million in pre-tax profits, and a maximum of $0.06 on the EPS. That's not exactly going to light a fire under the stock. David T.