Palm, the company that single handedly created the handheld computing market in the mid 1990s, is in trouble–yet again.
In its latest financial update, the company said it expects revenue in the range of $190 million to $195 million for the second quarter, nearly 40% below what some Wall Street analysts had projected.
People have been predicting the company’s imminent demise for several
years, and so far the company has defied these grim prophecies. But the
combination of a recession, increased competition, and a years-long
struggle to create a next-generation mobile operating system are now
doing serious damage to its top line.
Based on the shortfall, analysts say sales of its $99 Centro smartphone — the company’s only real hit in recent years — may be eroding faster than expected.
Palm is battling the odds for survival in a weak economic environment. The company faces increasing competition in the smartphones segment from rivals such as BlackBerry maker Research In Motion, Apple, and now HTC thanks to the new Google Android operating system.
Palm has tried to cut back on operating expenses through layoffs and consolidation but it is unclear how much longer it can soldier on. The company’s gambit of hiring former Apple executives to revive its design also doesn’t seem to be paying off.
Despite the odds stacked against it, Palm executives say they are focused on new products for next year.
"Palm maintains its next-generation Linux software platform is on track to be completed by year-end," said Lawrence Harris, an analyst with brokerage firm CL King & Associates in a research note.
Hardware based on the new platform is expected to be ready sometime in the first half of 2009.
Harris expects the Palm will provide with more details around its new software later this month when the company hosts a conference call to discuss its financial results.
Palm is also working to bring a CDMA version of its Treo Pro phone to market, he says, with either Sprint or Verizon. The Treo Pro is currently being offered in an unlocked version nationwide.
Photo: (existentist/Flickr)
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