Add to del.icio.us     Digg this

Dec. 21, 2009

When Palm launched its highly anticipated Palm Pre in June, it was hoping its new smartphone would turn around its fortunes, so to speak.

Unfortunately, this hasn't happened yet and the company is still hitting some road bumps. Will it stop soon? Well the company's latest sales numbers are still worrisome.

Friday Palm reported just $78.1 million in gross revenue for its second quarter of 2010.

As a result, the handset maker grossed only $5.5 million in profit. A meagre 7 percent net profit margin.

That won't be enough to sustain the company some wireless industry analysts say.

Jon Rubinstein, Palm’s CEO said in a statement “we are continuing to execute strongly against our long-term strategy with the delivery of the new Palm Pixi and the upcoming opening of Palm’s full mobile developer program.”

However, not everyone agrees with Rubinstein's comments.

According to a press release published Friday, the company shipped a total of 783,000 smartphone units during the quarter, representing a 5 percent drop from the first quarter of fiscal year 2010 but a year-over-year increase of 41 percent compared to the second quarter of fiscal year 2009.

So-called smartphone "sell-through" for the second quarter was 573,000 units, a drop of 29 percent from the first quarter of fiscal year 2010 and down 4 percent year-over-year.

Overall, UBS Research notes that Palm will host an event at CES 2010 in Vegas on Jan 7, where the research company believes Palm "could provide a near-term catalyst."

Specifically, UBS expects that a distribution agreement with Verizon Wireless for the Palm Pixi will be worked out in the coming weeks.

UBS kept Palm at a neutral rating for the mean time.

The next 6 to 12 months will be extremely critical for Palm, as the very competitive smartphone segment continues to be even more competitive with the likes of the iPhone, HTC's Android and Motorola's new Droid handset.

Palm's stock was down over 13.6 percent to $10.14 in Friday's trading, on increased volume of shares traded.

Add to del.icio.us     Digg this

Source: UBS Research.