Phone
The shares, which have lost more than a third of their value since setting a 2009 high on Sept. 30, fell $1.02 to $10.70 yesterday in extended trading. Palm reported a loss, excluding some items, of 37 cents a share, compared with the 33-cent loss estimated by analysts in a Bloomberg survey.
Palms sales and marketing expenses for the Pre and Pixi phones jumped 64 percent in the latest quarter, while total operating costs rose 21 percent. The higher expense hasnt helped Palms devices crack the global smart-phone market in which Research in Motion Ltd. and Apple Inc. have gained share.
“The primary concern right now is the fact that, frankly, the units are not going to be as robust as I believe everybody hoped,” said Ilya Grozovsky, an analyst at Morgan Joseph & Co. in New York, who recommends selling the shares.
The stock has more than tripled this year on expectations that devices built on Palms new operating system will compete with offerings from Research In Motion and Apple.
Palms net loss, the companys 10th straight, narrowed to $85.4 million, or 54 cents a share, in the fiscal second quarter, compared with a loss of $508.6 million, or $4.64, a year earlier, when company had a tax expense.
Revenue fell 59 percent to $78.1 million, Palm said. Sales, including deferred revenue, were $302 million, compared with the $267 million estimated by analysts.
Touch-Screen Pre
After introducing the touch-screen Pre with a new Internet operating system in January, Palm started selling the device in June and added the smaller, cheaper Pixi last month. In the U.S., both devices are offered only through Sprint Nextel Corp., the countrys third-largest carrier, while Research In Motions BlackBerry phones are distributed by several carriers and Apples iPhone is supported by AT&T Inc.
“This is going to be a very competitive business,” Palm Chief Executive Officer Jon Rubinstein said yesterday in a conference call with analysts. “Weve got a really good plan going forward, and were going to continue to execute along that plan.”
The Sunnyvale, California-based company said it shipped 783,000 smart phones in the quarter, a 5 percent decline from the previous period.
Market Share
Research In Motion yesterday forecast sales and profit for the current quarter that beat analysts estimates, lifting the shares 12 percent in after-hours trading.
In addition to the BlackBerry and iPhone, Palm is vying for customers with new devices from Motorola Inc. that are powered by Google Inc.s Android operating system. Last month, Schaumburg, Illinois-based Motorola introduced the Droid phone, which like the Pre can run multiple applications at once and features voice-driven Web searches.
To expand outside the U.S., Palm began selling the Pre in the U.K., Ireland, Germany and Spain in October. The company said on the call that international sales accounted for more than 10 percent of total revenue.