Handspring, maker of the Visor line of Palm OS based handhelds, warns that it’s fourth quarter sales will be between US$60 and $65 million, about half of the $121.3 million the company told shareholders in early May.
“Right now if I were Handspring, I’d seriously consider just taking all the unsold inventory and throwing it in a trash compactor,” Reik Read, an analyst at Robert W. Baird, told
CNET. “I’m shocked by the size of the warning, but it tells you all you need to know about the severity of both pricing pressures and inventory issues these guys are facing.”
Both Handspring and Palm have dramatically lowered prices in recent months in an attempt to unload inventory in the United States and abroad, an oversupply that analysts predict will take at least three months to correct, according to CNET. In fact, it’s turning into a price war.
“It’s really ugly out there,” Read said. “In the long run, this is a market that can support two or more companies, but for now this is something that both companies are just going to have to fight through.”
Last quarter, Handspring posted a net loss of $6.7 million, or 6 cents per share, on sales of $123.8 million. Handspring shares, which peaked at $99.31 in October, fell 10 cents to close yesterday at $8.90 in the regular trading session before falling to $8.05 in after-hours trading, CNET reported.
There seems to be a trend here. Last month Palm warned that revenue in its current quarter will 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. 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.
Any bets on whether this latest development will heat up the rumors that Apple will buy Handspring or Palm?