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

To: Win-Lose-Draw who wrote (3932)	2/28/2001 11:23:28 AM
From: Rob C.	Respond to of 6784

>>>I think a better question is why Palm had all that stock on hand... Holiday sales??? Question is where does PALM stop 15? 10? Who knows?

To: Win-Lose-Draw who wrote (3932)	2/28/2001 11:23:28 AM
From: Rob C.	Read Replies (1) \| Respond to of 6784

>>>I think a better question is why Palm had all that stock on hand... Holiday sales??? Question is where does PALM stop 15? 10? Who knows?

To: Win-Lose-Draw who wrote (3932)	2/28/2001 2:16:51 PM
From: David E. Taylor	Respond to of 6784

WLD: I need to correct my earlier comment about the "cost" of the $100 Palm VIIx "rebate" program in Q4 and later Q's. If you read the rebate offer carefully: palm.com you find that you have to (1) buy a VIIx between 2/15/01 and 12/31/01, (2) subscribe to a one year Palm.net plan for either $24.99 or $44.99/month, (3) after your third month of service, you get a credit of $100 on your Palm.net account. So the "rebate" offer is not a cash rebate at all, despite the fact that Palm calls it a "rebate". The $100/unit sold will be therefore be reflected in a reduction in Palm.net monthly revenues (below what they would have been w/o the rebate) beginning no earlier than June, which is in Q1 of FY 2002, and will have no effect on COGS or marketing expenses. Also, due to the "after the third month" provision, the reduction in Palm.net revenues will be spread out over Q1 through Q4 of the next FY, and will probably be invisible on the income statement, since Palm.net revenues will be steadily ramping up over the next year if this incentive program works. Right now, revenue per Palm.net sub is running around $22/month, a number that will likely hold or even increase somewhat since the rebate offer excludes the lowest rate ($9.99/month) service and pushes people into the higher rate services for at least a year. It's actually a neat way to push VIIx sales (now that they've presumably solved the component shortage problem), without incurring cash rebate marketing expenses, while at the same time getting people signed up for a year's worth of Palm.net at a 25% discount. It remains to be seen if the strategy will work. Sorry if I misled anyone by some rather loose wording in my previous post. David T.