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

To: Tom R. Clarksburg who wrote (3921)	2/27/2001 9:26:54 PM
From: Win-Lose-Draw	Read Replies (1) \| Respond to of 6784

Large shipments of PALM Vx made from Feb 24 to Feb 26 That makes sense, it's about the right time to flush the channel for the upcoming m5xx models. It will be interesting to see if there are large rebates on these models, and it is also interesting that they had that many to ship. Someone be kind enough to remind me...is PALM a "book on ship" kind of company?

To: Tom R. Clarksburg who wrote (3921)	2/27/2001 10:11:41 PM
From: Mang Cheng	Respond to of 6784

Tom, your numbers are really amazing and thanks for your great work. But as you mentioned, I strongly doubt that Palm management would want to surprise the Street by that much margin even if they can. Their guidance for Q3 revenue is 465-490 millions $. Sequentially down from Q2 of 522 millions. Even their guidance for the strong Q4 is for 590 million dollars. I think Palm will do very well even if it can only match Q2's number of 522 millions. If they post $609 millions as you have calculated, they not only would have beaten this Q numbers, they actually would be able to beat the next Q numbers ! That sounds a bit unrealistic for a slowest qtr and the share price today doesn't seems to have discounted any of these developments. But certainly Palm price can ramp up once the quiet period is over (by the middle of next week) and it had done it many times before. But since there is no reason for me to doubt your research, I would like to postulate some reasons why Palm V is suddenly having such big shipments. Palm may want to clear ALL Palm V from its internal inventory and make room for the new Palm m500 and m505. Since they may have already halted manufacturing these Palm Vs, retail stores may have a chance to buy them all up at a discount. Retail stores, knowing they would have absolutely no problems in selling all the Palm V at discount in the next three months, would just order as much as their allocation allow them to. These soon to be discontinued Palm III and V could very well become collector's item - who knows - there are only a few millions in the world and brand new ones even less. Otherwise I can't think of any reason why there is such a hugh jump in shipments. Mang

To: Tom R. Clarksburg who wrote (3921)	2/28/2001 8:30:44 AM
From: David E. Taylor	Respond to of 6784

Tom: I'm not surprised that you've found large Palm Vx shipments in the last few days of the Q. In the Q2 CC, Bruner said they anticipate that a significant percentage of our Q3 sales will be in the last month of the Q. That's because first, Palm's Q's (as are many similar hardware companies) are typically back end loaded, particularly this one right after Xmas. Second, they were anticipating component shortages (RF chips for the VII's and screen driver chips for the V's) easing in the Feb/March timeframe, and given the declining demand for cell phone components, this easing may have already happened. Third, since the Palm V replacement model is anticipated in early/late March, at some point they had to switch over a chunk of their contract production capacity from Palm Vx's to Palm 5xx's to build significant inventory ahead of the new product launch, to avoid the iPaq fiasco where there's high demand and insufficient supply. Since Palm managed the M100 intro well, I'd expect them to be as successful with the M5xx intro. So it's understandable that a large number of Palm Vx's needed to be shipped into the distributor channels ahead of the new product launch. OTOH, I think it's a given that Palm will intro a rebate program, possibly as big as the VIIx program (or maybe a bundled promotion a la IIIc), in order to move these 500,000 Palm Vx's off the shelves. So Q4 will have in it the costs of the $50 IIIx rebate program, the costs of the $100 VIIx rebate program, and the costs for any Palm Vx promotion/rebate program, and the combined costs of those rebate programs could easily be $100+ million in Q4. I wouldn't be surprised to see Palm manage the Q3 revenues to hold enough in their pockets to ensure they can meet Q4 expectations (which will probably be at least the $587 million I gave earlier), since they don't know at this stage how well the new Model 5xxx's will sell. I'd be really surprised if they try to blow out Q3 to the $609 million revenue you have - that's about 2.3 million units, almost 10% over Q2's shipments. I'm not disputing your number, since my own calcs using your numbers for February's Vx and VIIx shipments results in $580 to $600 million. As I pointed out earlier, to meet a 100% increase over 2000's Q3, they "only" need $545 million, and that would be about 11% upside on the upper end of their guidance - more than enough to get attention from analysts and investors in the economic environment we are in. Keep posting your thoughts and info, they're very helpful and thought provoking. David T. P.S. Hope you had a good trip.