- RCB Capital comments on Palm (NASDAQ:PALM) saying the co has aborted the Linux-based $499 Foleo 'mobile companion', 3 months after announcing it. The cancellation is mildly positive given firm's prior view of Foleo's limited market opportunity (they wondered why a Smartphone user who already has a laptop would buy a Foleo) and unclear value proposition. Palm expects restructuring charge of <$10M, to impact Q2/ F08.
Palm suggests its decision allows 'focus on the development of its next-generation Smartphone platform'. However, RBC speculates Elevation Partners accelerated this move, as the next generation platform " intended to accommodate multiple models and efficient manufacture " as well as efforts to update the Palm OS, could be behind schedule, and Palm may be shifting R&D resources to mitigate further delay. Positively, Palm may be taking a more realistic stance on speculative projects, and it's possible other tough decisions are being made behind the scenes to refocus teams on projects with better risk/return.
While cancelling Foleo may be a positive step, Palm continues to remain stalled as competition (RIM, Apple, HTC, Symbian and Windows Mobile devices) moves forward. Firm continues to maintain caution pending improved visibility to Palm's turnaround. They would become more bullish with positive analyst/customer reception and checks showing early promising sales of new Palm Smartphones, or more negative if checks show stalling sales momentum, delayed launches and other development challenges.
Notablecalls: I made fun of Foleo when it was announced and I must say I'm glad to hear EP pressured PALM to scrap the project early on. You know what guys? I'm actually beginning to like PALM here. Here are the reasons:
- PALM's a $15 stock that's about to announce a $9 dividend in the coming months (provided the Elevation Partners deal is approved in a week).
- There's almost a 25% short interest meaning it has most certainly become a crwoded short. PALM is lagging the overall smartphone market but that's hardly news.
- Provided the EP deal is approved, Jon Rubinstein, Apple's retired head of hardware joins Palm as executive chairman to head up product development while Apple's former CFO Fred Anderson joins Palm's board of directors. New products won't show up for about another year or so (and will not reach the market for 18 months) but when they do..there's a strong chance they will be interesting.
The iPhone is likely eating Palm's lunch right now but I just don't see much downside from here. The upside, however could be substantial. As I said, I'm starting to like PALM here.
Palm suggests its decision allows 'focus on the development of its next-generation Smartphone platform'. However, RBC speculates Elevation Partners accelerated this move, as the next generation platform " intended to accommodate multiple models and efficient manufacture " as well as efforts to update the Palm OS, could be behind schedule, and Palm may be shifting R&D resources to mitigate further delay. Positively, Palm may be taking a more realistic stance on speculative projects, and it's possible other tough decisions are being made behind the scenes to refocus teams on projects with better risk/return.
While cancelling Foleo may be a positive step, Palm continues to remain stalled as competition (RIM, Apple, HTC, Symbian and Windows Mobile devices) moves forward. Firm continues to maintain caution pending improved visibility to Palm's turnaround. They would become more bullish with positive analyst/customer reception and checks showing early promising sales of new Palm Smartphones, or more negative if checks show stalling sales momentum, delayed launches and other development challenges.
Notablecalls: I made fun of Foleo when it was announced and I must say I'm glad to hear EP pressured PALM to scrap the project early on. You know what guys? I'm actually beginning to like PALM here. Here are the reasons:
- PALM's a $15 stock that's about to announce a $9 dividend in the coming months (provided the Elevation Partners deal is approved in a week).
- There's almost a 25% short interest meaning it has most certainly become a crwoded short. PALM is lagging the overall smartphone market but that's hardly news.
- Provided the EP deal is approved, Jon Rubinstein, Apple's retired head of hardware joins Palm as executive chairman to head up product development while Apple's former CFO Fred Anderson joins Palm's board of directors. New products won't show up for about another year or so (and will not reach the market for 18 months) but when they do..there's a strong chance they will be interesting.
The iPhone is likely eating Palm's lunch right now but I just don't see much downside from here. The upside, however could be substantial. As I said, I'm starting to like PALM here.
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