Palm report reveals Pre is matter of life or death

 

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By Stuart Turton

Posted on 4 Mar 2009 at 11:26

Palm has announced that revenues will drop by 73% in its third quarter, heaping more pressure on the success of the Pre.

In the same period the company tore through $100 million of its cash reserves, leaving it with $220 million to play with as the launch of the Pre looms.

The quarterly report was ominous across the board. Income for the period is estimated to be between $85 million and $90 million, painfully short of the $312 million it made during the same period in 2008.

The company blamed the results on low demand for older products, such as the Treo Pro, but reaffirmed that Palm's future is bright.

"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," says Palm chief executive Ed Colligan.

In order to ensure there's enough cash in the kitty to ensure the launch goes smoothly, Palm will force investor Elevation Partners to sell $49 million worth of its stake to other investors on better terms by 31 March.

Palm is entitled to retain any profits from such remarketing, and can confidently expect a healthy return due to the buzz surrounding the Pre.