Palm’s sales are falling “well short of even its worst forecasts and its cash is dwindling,” which may lead to major cutbacks in the company’s plans, according to a CNET analysis piece.
The handheld maker warned that revenue in its current quarter would come in at roughly half its forecast, which had already been sharply curtailed. On March 28, the company said that its revenue for the third quarter rose to $470.8 million, up 73 percent from the same quarter last year. However, concerned about the current economic downturn, the company announced plans to reduce its workforce and trim operating expenses by up to 15 percent.
Palm now expects revenue in its fiscal fourth quarter to range between US$140 million and $160 million, compared with its previous revenue outlook of $300 million to $315 million. The company expects its operating loss for the quarter to be between $170 million and $190 million, more than double its prior projection. Its quarter ends June 1.
“Analysts say there are no easy answers,” according to CNET. “The company may have to scale back its far-flung effort to be the device manufacturer, operating-system developer, Internet service provider and portal for handheld devices for both businesses and consumers.”
Palm CEO Carl Yankowski said yesterday that the company is looking at various options that would involve “more or less dramatically changing our business model.” And the company has dropped its plans to buy Extended Systems, a mobile solutions vendor in the enterprise space.
Palm hoped that by acquiring Extended Systems, the company’s prominence in the mobile enterprise market would strengthen Palm’s position, and bring Palm the opportunity to enhance its handheld device business. Plus, for the first time, Palm would have been able to sell mobile infrastructure software, services and support.
Although the company hasn’t discussed other options, CNET says Palm could put itself up for sale. If it did, would Apple be interested?