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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (90539)	3/30/2001 4:28:03 PM
From: Elwood P. Dowd	Respond to of 97611

Palm Losing Its Edge? by: skeptically 03/30/01 04:26 pm EST Msg: 227297 of 227297 newsalert.com ch-&StoryTitle=compaq March 30, 2001 16:10 Palm Losing Its Edge? Handheld computer maker Palm (Nasdaq: PALM) was beaten earlier this week after reporting third-quarter results above expectations. The damage was done when the company forecasted dreary Q4 results and failed to give guidance for the upcoming year. Palm blamed the shortfall on difficult economic conditions. There's more to the story, however: Palm's suffering from a difficult product transition and losing market share to the competition. Palm posted earnings of $0.02 per share, beating estimates by a penny. Sales were $471 million, below the Street's estimate of $480 million. Things got nastier when Palm forecasted revenues would drop 34% sequentially, resulting in a loss of $0.08 per share, well below estimates for a profit of $0.03 per share. Did I mention Palm's laying off 10% to 15% of its staff? Two figures worth noting are increasing inventories and license revenue. Inventories increased three-fold sequentially to $102 million, compared to an 11% sales decline. Palm said that resellers were having difficulty selling its products, citing the U.S. economic slowdown. That's true, but the bigger reason is Palm's product transition. After rival Handspring (Nasdaq: HAND) unveiled its Visor Edged recently, the end-all of the Palm VX, Palm rushed the launch of its m500 product series. Palm gave the new product major props at the CeBit show last week, but an unfortunate side effect was that it couldn't ship enough of the devices to retailers. With Palm struggling to unload the older Palm V, retailers pulled orders back and Palm got stuck. Making matters worse, Palm forecasts a $200 million increase in inventories next quarter. Palm's operating system struck out as well, as license revenues made up 2% of sales. By licensing its OS, Palm hopes to reap the financial advantages of the software business, such as high margins and low capital expenditures. Things haven't worked out and it's unclear if Palm's OS will dent its top-line. It won't get any easier. Compaq's (NYSE: CPQ) iPaq, which runs Microsoft's (Nasdaq: MSFT) OS, continues to threaten Palm's market share. In the aftermath of the news, competitors Handspring and Research in Motion (Nasdaq: RIMM) got caught in the sell-off, their stocks decreasing 33% and 18%, respectively. The ugly news has muted the once unabashed enthusiasm for the handheld market. In the conference call, Palm cited a PC Data survey that stated device shipments increased 59% year-over-year in February, compared to 100% in January.....more at link....... Ignore this User \| Report Abuse < Previous \| Next > [ First \| Last \| Msg List ] Msg #: Reply Post All Subject Message Text Authors