There's a certain irony that the announcement of a product designed to save the company is actually killing it - at least in the short term...
Everyone's favourite zero to hero company Palm is suffering this week. The smartphone manufacturer has announced preliminary results for its third quarter of fiscal year 2009 and they're bad - like really bad, like really really bad.
Revenues for the period will range between just $85m and $90m, heavily down on the same period a year ago with expenses for the quarter eclipsing these figures entirely at between $95m and $100m. To put this into perspective, Palm admits the "company's cash, cash equivalents and short-term investments balance" (essentially the whole business's worth) will consequently be just $215m to $200m - a value which could be swallowed in less than a year.
Ironically, Palm knows a big factor why: the Pre.
"The revenue declines vs. the company's second quarter of fiscal year 2009 and third quarter of fiscal year 2008 are the result of reduced demand for Palm's maturing legacy smartphone products," admitted the company which knows no-one wants to buy a Centro or a Treo Pro having seen this wonder phone unveiled at CES.
"The much-anticipated launch of the Palm Pre remains on track for the first half of calendar year 2009, but as expected we've got a difficult transition period to work through," agreed Palm President and CEO Ed Colligan. "Despite the challenging market environment, the extraordinary response to the Palm Pre and the new Palm webOS reaffirms our confidence in our long-term prospects and our ability to re-establish Palm as the leading innovator in the growing smartphone market."
The short term solution sees Palm chasing yet more funds which could be attained by "remarketing of a portion of the common shares underlying the Series C preferred stock and warrant units owned by Elevation Partners."
If there is an upside amid the financial turmoil it is this: my first impressions were mind blowing and we all want the Pre available as soon as possible. Now the very future of Palm depends on this remarkable handset not being late...
Update 10.03.09: As if to emphasise the severity of the situation Palm has now commenced a stock resale plan to generate funds. Palm astutely repurchased large quantities of its shares prior to the Pre launch and is now selling $49m worth for their current value of $83.9m. $49m of that will repay investor Elevation Partners with the remaining $34.9m expected to keep the company going until the Pre hits - hopefully sooner rather than later...