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Sat, Nov 21, 2009 - 12:05 AM EST  —  AAPL: 199.92 (-0.59, -0.29%)  |  NASDAQ: 2146.04 (-10.78, -0.5%)

Report: Beleaguered Palm axing jobs due to disappointing ‘Pre’ sales
Wednesday, September 30, 2009 - 04:12 PM EST

"Palm is engaging in a fresh round of job cuts due to disappointing sales of the Pre, according to a pair of assertions made today," Electronista reports.

"One tip has the smartphone creator laying off some staff within the US. Numbers and the particular divisions affected aren't mentioned by CoolSmartphone; the move is only known to be prompted by 'restructuring,'" Electronista reports.

Full article here.

Gerard Hallaren, a Managing Partner of TownHall Investment Research, reports for Seeking Alpha, "Since Palm reported its August quarter losses, we have been perplexed by a disconnect between PALM’s device units sold and our estimates of store level sell through. According to PALM’s reported sell through, inventory increased by 13k units and since the 'vast majority' of both the device units shipped and the device units sold were units of the Pre, there couldn't be an inventory problem. The gap between the two is only 13k. However, since the company recognizes revenue on sell in to the channel and the company defines device units sold as units that have been shipped from Sprint (their primary customer) to either customers or second tier distributors, PALM could offer investors a high number of units shipped but still have a glut of inventory in the channel. We believe that channel inventory is currently about 11 weeks, which we believe will pressure reorder rates and make it more difficult to sell high ASP products going forward."

Halleren reports, "Sprint’s acts as PALM’s sole distributor in the United States accounting for 85% of revenue. Each of the second tier distributors such as Best Buy or Amazon.com buys inventory from Sprint rather than from PALM. PALM is accounting for this as devices sold. This does not appear to be understood by investors... We believe this means to PALM is that there is a glut of inventory in the channel that will prevent reorders from existing customers in the United States, reduced expectations for future carrier partnerships and if there is price protection or the ability for customers to return merchandise, potentially a large write off coming. At the very least, we believe that break even in 2H10 is in jeopardy."

"Our best information says Sprint activated a little less than 375,000 Palm Pres as of the end of August. This left about 275,000 or 11 weeks of Palm Pres in 'Sprint channels' at the end of August. This is not to say Sprint is carrying 100% of the cost of these phones. Best Buy, Radio Shack, Walmart, Amazon and Letstalk.com are all likely carrying some of this inventory cost. How much we do not know. What these dealers' return rights, price protection, rebates or other incentives are we also do not know. These dealer terms and conditions vary greatly with the phones," Halleren reports. "However, the core economics around the Palm Pre's market are slipping."

Halleren reports, "Sprint reduced the price by 25% to $149 only 93 days after first shipping the Pre. Amazon is selling it for $99. Walmart and Letstalk.com are both offered "specials" on the Pre for is $79. While undoubtedly some expect lower prices will improve demand, we believe the lower prices are more likely to blunt some competitive impact."

Full article here.

John Paczkowski writes for AllThingsD, "An 11-week glut of inventory in the channel? If that’s the case, it’s certainly cause for concern, more so because many investors are evidently unaware that this is even a possibility."

"Palm and Sprint investors both might want to pay a bit more attention to Sprint’s 10-k in the future," Paczkowski reports.

Full article here.

Jesus Diaz writes for Gizmodo, "Eleven weeks of inventory in the channel is an staggering number. If true, that may explain the fast price cuts by resellers: First a $50 discount to $150 with a rebate, then slashed to $100 in Amazon, and then the all-mighty Walmart cutting it to a ridiculous $80."

"It will also explain Sprint CEO Dan Hesse's less than enthusiastic comments about the Palm Pre, when he admitted in a Charlie Rose interview that the Pre couldn't play in the same league as the iPhone, 'the Michael Jordan' of smartphones," Diaz reports. "Could this be connected to the rumors about Verizon ditching the Pre? Only time will tell."

Full article here.

MacDailyNews Take: Counting "Pre" sales, eh, Palm?

[Thanks to MacDailyNews Reader "Joe Architect" for the heads up.]

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Sep 30, 09 - 03:20 pm Comment from: Macdoc

"Pre" was such a Gay name..

Sep 30, 09 - 03:26 pm Comment from: The Velvet Hammer

I played with the Pre and it does a lot of cool stuff right. I think it's a damn shame to hear people are losing their jobs..

/lost my job back in may

//freelancing FTW

Sep 30, 09 - 03:28 pm Comment from: Anonymous©

Wow, 11 weeks, that's almost a whole quarter's worth of inventory. That's almost what I would consider channel-stuffing.

And for those who want to know about Apple, they typically keep 4 to 6 weeks of inventory in the channel, and they update the analysts on inventory levels each and every conference call.

Sep 30, 09 - 03:34 pm Comment from: Jersey_Trader

Sorry, but the people at Palm should have been looking for a new job long ago. This battle was lost to Apple long ago. Those that think differently are delusional.

The difference in applications for the iPhone and iPod touch (and soon the Mac tablet) is about 1,000 to 1 for other (almost) smart phones. With a much smaller spread, Microsoft Windows took market share from Apples Mac 15 years ago.

Apple is now on to the book and magazine market. What market will be next?

Sep 30, 09 - 03:35 pm Comment from: Paul Johnson

This article is not completely fair because Palm is probably letting Windows Mobile programmers & designers go. Nevertheless, Palm is still nothing more than acquisition bait, probably for either Nokia or RIM.

Sep 30, 09 - 03:37 pm Comment from: ROFLCOPTER

@Jersey_Trader: Palm was losing the smartphone battle long before the iPhone came out; as MDN so often says, they've been "running on fumes" for years.

Sep 30, 09 - 03:45 pm Comment from: Jersey_Trader

Did you all read the number 1 and 2 positions in the AdMob stats. http://www.macrumors.com/

"When all types of 'handsets' are included, Apple's iPod touch grabs the second spot behind its iPhone sibling. While not a mobile phone, the iPod touch is included in the survey because it runs the iPhone OS and accesses the same content being served to smartphones and other handsets."

Why would any programer develop apps for any other device?

Sep 30, 09 - 04:42 pm Comment from: MDmac

@ Macdoc We don't really need that kind of juvenile crap here!

Sep 30, 09 - 04:56 pm Comment from: qka

So is Bono selling off his stake?

Hypocritical fsck probably needs the loss as a tax dodge.

Sep 30, 09 - 05:20 pm Comment from: ghostcop2000

Honestly, I hate these articles on MacDailyNews, there is nothing more pathetic than sneering at people losing their jobs, you do nothing but reinforce the idea of Mac users as condescending, patronising fanboys, you don't need to do this.

Sep 30, 09 - 05:31 pm Comment from: OpJ

GhostCop: Normally I agree; but Palm is getting slammed on merit.

Sep 30, 09 - 05:54 pm Comment from: Jon

That's right Palm. Fire the workerbees for the foolishness of the wannabees.

Sep 30, 09 - 06:39 pm Comment from: boulderfrog

@ MDmac

Anything you need to tell us?

Sep 30, 09 - 07:31 pm Comment from: jambo

I think it was impossible for Palm to compete. Apple has a very specific Jobs quality mindset that is ingrained into the culture. It starts at the top and runs to the bottom.

Palm is trying to be Apple, but because that fanatical mindset is not ingrained into the culture, their products will end up as wanna-be's. At this point, they are shipping a product to meet marketing's numbers, praying things will be OK.

They never had faith or confidence in their products, and the market has decided their fate.

Sep 30, 09 - 08:09 pm Comment from: NotYou

MDN, why don't you have a "schadenfreude" tag for all these posts that just ridicule or bash away on Apple competitors (and often just perceived competitors)? That way I could set up a feed that excludes posts with that tag, and then maybe I could spend more time reading actual Mac News, Daily. Of course, that custom feed would omit about 75% of your posts...

Sep 30, 09 - 08:10 pm Comment from: NotYou

And do you have a macro set up so that you don't have to type the word "beleaguered" 20 times a day? I hope you do. It'd save you quite a bit of time.

Sep 30, 09 - 09:03 pm Comment from: alansky

But I thought the Palm Pre was going to demolish the iPhone and usher in a brand new day for Palm shareholders...

What happened? :-(

Sep 30, 09 - 09:09 pm Comment from: alansky

@NotYou:

You obviously don't understand how richly deserved Palm's decline appears in the eyes of the Apple faithful. You won't see MDN readers going off on RIM like this. And if you do see that, then those contributors are morons. There's intelligent competition, and then there's impotent, mean-spirited bluster. Take a wild guess at which of these two labels applies to Palm.

Sep 30, 09 - 09:21 pm Comment from: ishkabibble

Is there any group of people more filled with hate and vitriol than Apple fan boys?

Sep 30, 09 - 10:40 pm Comment from: montex

B...b...b...b...but multitasking!

/standard reply on all Pre stories.

Oct 01, 09 - 12:10 am Comment from: x

@ishkabibble.

You dont like it here, carry your whining ass

Oct 01, 09 - 01:18 am Comment from: ishkabibble

how mature X. Thank you for proving my point. Spectacular job.

Oct 01, 09 - 02:18 am Comment from: Macaday

But in the UK the BBC still describes it as an iPhone killer.

O2 must be reading this with alarm - and alerting their lawyers, because they take it on this month, probably the reason for Apple giving the iPhone to Orange and Vodacrapfone.

Ouch all round.

Oct 01, 09 - 02:27 am Comment from: Macaday

mad @ ishkabibble

You write: "Is there any group of people more filled with hate and vitriol than Apple fan boys?"

Yes indeed there are, Microsoft Windows community, Palm community, etc. who FOR YEARS have declared their utter contempt for everything Apple and its users.

A few barbs thrown at a smug, complacent, arrogant company like Palm is like nothing to what Apple users have been used to.

Oct 01, 09 - 04:06 am Comment from: MacMan

Where was the Mac desktop app for Palm when Palm was king of the hill? How different was the Mac "version" compared to the Windows full fledged full featured version?

Basically, things come back to roost, and we don't forget history in the computing industry.

Why else do we want MSFT dead? Dell too.

Oct 01, 09 - 07:20 am Comment from: Dev Singh

@ ghostcop2000 ; Agree.

Oct 01, 09 - 08:30 am Comment from: Think

History.
How quickly people forget. There are many companies that just despised Apple and left them alone or worse, said screw you! Well, times are a changin and any long time (15 or more years) Mac users know what kind of hate and scorn was heaped upon us over the years.
Much of it undeserved.

Just because we picked a platform that actually was better, PC users and the like just ripped us for being different. Very few actually educated themselves about the Mac, the ones that did, usually did an about face and were nice to Mac users. I still run into IT departments filled with these people. I can't wait until Windows dies and OS X moves into corporate world big time. Some of these guys I will laugh in their face when it happens.

I have no patience for closed minded people. In this industry you have to always learn and educate yourself much faster than any other industry. The lazy ass IT guys that don't, they deserve a pink slip.

Apply this lesson to Palm.

Oct 01, 09 - 11:13 am Comment from: joe

Wow! Imagine that! Apple misleading the public into thinking a competitive product is doing really bad! Who would have thought???

Get a life and stop posting negative and false information regarding Palm. It's obvious you didn't do your homework, or maybe you did but decided to word your article the way you did only to stir up anger in others.

Palm did state that they may let people go, but it's in the Windows Mobile department, not because of poor Pre sales. They're going to focus full force on webos.

You remind me of lawyers who twist words around to suit your agenda.

Do everyone a favor and just focus on your own world. Stop trying to smash others just because they're viable contenders in your arena. I'm not saying the Pre is any better than the iPhone, but all you apple fanboys have been posting nothing but negative reviews on the Pre just because you're worried it may compete. If the phone really meant nothing to you, why bother writing about it at all?

Oct 02, 09 - 05:59 am Comment from: mindpower

Hmm, I wonder how much money Palm has wasted on this iTunes sync court case. Surely it'd have been a lot cheaper for them to just write their own software.

Also, as a big Apple fan, (three Macs and an iPhone at home) I don't understand why so many Apple fanboys belittle Palm. Competition is good, and the Pre pushes Apple to improve the iPhone. It's good for us consumers.

Saying "oh but people have been giving Apple uses a hard time for years" is childish. Rise above that kind of school yard tactics people, and show a little class.

I hardly come to MDN these days because the fanboy comments are so negative.

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