Palm, Inc. (NASDAQ: PALM) is perhaps becoming the poster child of "What Not To Do As A PDA/Smartphone Company."  The stock is getting crushed again on yet one more warning.  Palm now expects revenues to be in a new lower range of $345 million to $350 million for the second quarter, compared with earlier guidance of $370 million to $380 million provided October 1, 2007.  Palm states that this is "due to a delay in shipping a product that the company had previously expected to have certified within the quarter."

The company warned on margins and warned on expenses and "unforeseen increase in warranty repair expenses during the quarter, a shift in product mix that included higher-than-expected shipments of Palm Centro™ smartphones and the delayed product shipment."  It will also post a loss instead of an expected positive earnings report.

The company goes on with more explanation but it just doesn’t matter.  I have personally been a Palm user for more than two-years and despite some problems here and there have been relatively happy with the product and am considering the newer Palm PDA/Smartphone through Verizon.  I won’t personally be switching over to Sprint to take advantage of the new Palm Centro, but I have heard many talking about getting it.  This has a shot at being revolutionary as a Smartphone gateway product, but the truth is that Palm just seems like they can’t get anything right.

But you have to wonder about these guys.  Palm does come up from time to time now in our screen for our "STOCKS UNDER $10 NEWSLETTER" but this is becoming one discouraging company.

A few months back I had noted how Cisco Systems (NASDAQ: CSCO) was dumping Palm as a supplier to its mobile workforce, although one of the heads of communications at Cisco informed me that Palm was still a partner.  I really wonder how long that will last as none of the news that comes out of Palm is ever good anymore. 

Shares are down 17% at $5.45 in after-hours trading. 

Jon C. Ogg
December 6, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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