Palm Moves Further Down The Road To Obscurity

Palm (PALM) may not be dead, but it is dying. It could not survive that ongoing success of smartphone leaders Apple (AAPL) and RIM (RIMM). The iPhone and Blackberry just keep gaining sales are remarkably speed.

Palm updated its guidance today and the news was bad. It expects that revenues for the third quarter of fiscal year 2010 will be in the range of $285 million to $310 million. Revenues for the quarter and full year are “being impacted by slower than expected consumer adoption of the company’s products that has resulted in lower-than-expected order volumes from carriers and the deferral of orders to future periods. Palm expects fiscal year 2010 revenues to be well below its previously forecasted range of $1.6 billion to $1.8 billion.”

Then Google (GOOG) offered Android to the wireless market and it was an astonishing success as companies from HTC to Motorola (MOT) embraced the new operating system. Google brought our a handset of its own, the Nexus One, which by most estimates is selling well.

Palm’s own operating system has nothing in common with Android, the Apple mobile OS, or RIM’s software. That means that software programmers have to build applications for a phone that does not sell well. The financial consequences of this are usually bad, particularly when the Apple App store has passed three billion software downloads.

Palm is often rumored as a buyout candidate for Nokia (NOK) or Microsoft (MSFT). The company is so weakened now, no other firm will want it.

Douglas A. McIntyre