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

To: Victor Lazlo who wrote (4524)	3/29/2001 7:25:27 AM
From: Souze	Read Replies (1) \| Respond to of 6784

I'm not sure what you mean by 'now'. The cc confirmed than sales of high-end products had grown, albeit not as fast as sales of lower-end product. The cc covers the 3rd quarter which ended Feb. 28. David Taylor's model also showed increased sales of high-end PALMs for that period. So, what do you mean by 'now'?, and where are you getting your data? I do expect that starting with the March 19 official announcement, we will see more people deferring their PALM V-like purchases until the new models hit the stores. But that's not data. It could be that more folks buy the PalmVx at its newly reduced price. Last week I ordered an M505 as a gift and was told that it would ship during the 3rd or 4th week of April; I'm not hanging my hat on that date, but if it is true, I (and others) could be adding to Palm's high-end unit sales, and income, in April, not May.

To: Victor Lazlo who wrote (4524)	3/29/2001 1:12:33 PM
From: David E. Taylor	Read Replies (1) \| Respond to of 6784

Victor: I disagree with your view that Palm is selling too much of the low end stuff and not enough of the high end. When I posted the preliminary results from my revenue/earnings model for Palm last month: Message 15389722 I was projecting $456 to $490 million in revenues (in line with Q2 CC guidance), 2.04 to 2.15 million units, $190 to $200 ASP, and EPS of $0.01 to $0.02, and these turned out to be in line with the actual reported numbers. I said that I felt those numbers were a stretch but doable, if the rebates and price reductions had the desired effect. Those estimates included 645,000 Palm Vx's sold, but the upper end of the projected ASP range included 455,000 Palm VIIx's, a big jump from Q2's 120,000 - 130,000 units. Since the ASP number came in at $197, these estimates were actually pretty close, meaning that the "high end" units made up over 50% of the product mix, up from Q2's 40% level, due to the big jump in VIIx shipments. While there's some "guesstimating" involved in coming up with these numbers, you can't get to an ASP of $197 without the Vx/VIIx portion being around 50%, given the lowered $399 selling price from Q2's $449. As far as Palm selling "too much" of the low end units, I don't believe Palm's selling these units has much to do with increasing the top and bottom lines on the income statement, since Palm only grosses around $100 or so on the M100, and maybe makes a profit of $10/unit if they're lucky. It's aimed at increasing the Palm user base as fast as possible in all potential markets, and not leaving any market segment open as a freebie to competitors like Handspring. The more Palm users, the more attractive Palm devices are to other buyers and enterprise customers, to developers, and to strategic business partners like Delphi, Seibel, Oracle et al, and the more potential users Palm has to sell recurring revenue services and upgraded devices to. How long did it take AOL to get to 20 million users? Palm now has 13 million, and will probably grow that number another 8-10 million over the next year, around half the number from all those low end buyers. The Pocket PC vendors like Compaq and HP don't want to touch this low end of the market and don't need to, since "Compaq" and Hewlett Packard" already have all the mind share they need, but IMO Palm has no choice. David T.