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Palm Pre beats expectations, drops WiMo to focus on WebOS

Prince McLean, AppleInsider

Palm announced smaller than expected losses on sales of the Pre, but its outlook failed to excite investors. Going forward, the company plans to raise new capital and bet the farm on WebOS, dumping both its older Palm OS and Microsoft’s Windows Mobile.

Palm Pre beats expectations, drops WiMo to focus on WebOS
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Palm announced sales of 823,000 smartphones, including both its new WebOS Pre and existing models of Treo and Centros that use the classic Palm OS and Windows Mobile. Wall Street’s expectations had come in at 700,000 to 800,000.

“I think they had a really strong 1Q. Obviously, well above expectations,” said Avian Securities analyst Matthew Thornton in a report filed by Yahoo Finance. “But when you back out the first-quarter upside and the full-year guidance that they provide, then there really isn’t much upside for the last three quarters. Of course, 2Q is going to be down.”

Palm reported a net loss (applicable to common stockholders) of $164.5 million for the quarter ending in August. It plans to raise new capital in the sale of 16 million shares. Elevation Partners plans to buy $35 million at the offering, according to the report.

After the very high profile introduction of the Pre in January, the company almost silently launched the Pixi, a slimmed down new WebOS phone without WiFi, earlier this month. It is expected to sell for $99 exclusively through Sprint later this year. The Pre’s launch fireworks fizzled with the introduction of the iPhone 3GS, which erased the hardware advantage Palm expected to maintain, dramatically reshaping inventor’s hopes.

In the company’s earnings conference call, Palm chairman and chief executive officer Jon Rubinstein, a former Apple executive (and NeXT veteran), seemed to channel Steve Jobs of ten years ago in saying, “We’re making significant progress with Palm’s transformation, and our culture of innovation is stronger than ever. We’re launching more great Palm webOS products with more carriers, and turning our sights toward growth.”

Rubinstein said Palm would be working to develop a family of WebOS products, establish a “world-class” development platform, build greater awareness of the Palm brand, and work to execute its goals with precision.

Part of that strategy involves dumping any distractions, including both the company’s original Palm OS and the Windows Mobile partnership that Palm forged with Microsoft in 2006, a year before Rubinstein arrived. Palm’s support for Windows Mobile helped nearly double Microsoft’s market share at the time.

The discontinuation of Palm’s Windows Mobile devices comes on the heels of Motorola’s announcement that it will also drop Windows Mobile to focus on Android, and the news that HTC, the largest Windows Mobile manufacturer, plans to offer half of its smartphones running Android next year.

  • august

    “…which erased the hardware advantage Palm expected to maintain, dramatically reshaping inventor’s hopes.”

    Is that supposed to be “investor’s”?

  • http://crankyoldnutcase.blogspot.com/ The Mad Hatter

    FYI – I got to play with a Palm Pre that one of the sales reps at Best Buy owned. It’s actually fairly nice, it works well, and while I don’t think it’s quite as good as an IPhone, it’s damned close.

    The only major issue I had with it, is it’s nearly 5 minute boot time. I’m serious. Start up is that slow. Hopefully Palm can fix that in a future update.

  • http://www.adviespraktijk.info Berend Schotanus

    Well, isn’t that great: the mobile game is between iPhone, Android and Palm. Sure Palm is not nr.1 but who would have expected them to be in the game anyway?

  • Pingback: Links 18/09/2009: Palm Dumps Windows Mobile for Linux, Moblin 2 is Coming | Boycott Novell()

  • http://crankyoldnutcase.blogspot.com/ The Mad Hatter

    You forgot Symbian and Windows Mobile. Symbian still has a lot of market share. Windows Mobile appears to be on life support.

  • FreeRange

    Symbian is dying. It is an old platform that can not survive in the long run against these new nimble players and platforms.

    The anal-yst you quote is laughable – “[Q1 results] well above expectations” – what a joke. What in the world is he basing this on? Palm expected a clear homerun against the iPhone, as did many investors thus the crazy run up in the stock, yet they barely got to first. They wouldn’t even release their actual Pre numbers.

  • http://crankyoldnutcase.blogspot.com/ The Mad Hatter

    Symbian is dying. It is an old platform that can not survive in the long run against these new nimble players and platforms.

    True. But what about the various other Linux/Solaris/BSD options? Take Symbian, and replace it’s kernel a modern kernel, and suddenly you have something that could compete.

    The anal-yst you quote is laughable – “[Q1 results] well above expectations” – what a joke. What in the world is he basing this on? Palm expected a clear homerun against the iPhone, as did many investors thus the crazy run up in the stock, yet they barely got to first. They wouldn’t even release their actual Pre numbers.

    They did, did they? I assume you have documentation of your claims? Well, don’t be shy, we want to see it.

  • e_arni

    it’s NOT just a matter of taking a flawed OS and replacing it’s kernel with linux to make it work nicely. and by the way – symbians userland, APIs and UI are crap as well, so no chance on that.

    please forget about the idea that you can just take two things, put them into a box, shake it, and everything will fall gently into place. that’s not how computers work.