When former Apple executive Jon Rubenstein joined the ranks of Palm a while back, it was widely believed that Palm and its new webOS would make a noticeable splash in the smartphone market. Sales of Palm’s flagship device however, the Palm Pre, have been underwhelming and Palm is now skating on financially thin ice. Things got so bad that Palm was compelled to publicly lower its earnings forecast for the most recent quarter citing lower than expected sales and lackluster revenues.
The advance notice, however, did little to prevent Wall Street from hitting Palm shares hard. Last week Palm shares plummeted 19% to $4.59 a share, marking a new 52 week low for the stock. Driving the huge sell of were reported losses of 61 cents a share whereas Wall St had been expecting losses to come in at 43 cents a share.
Adding fuel to the fire, 2 analysts cut their price target for Palm shares down to $0. Yes, a big fat ZERO. “Palm is essentially an accelerating death spiral,” Morgan Joseph & Co. analyst Ilya Grozovsky said, “They have had a tremendous problem selling their devices even at carriers like Verizon with 80 million subscribers.”
In a recent letter penned to Palm employees, Palm CEO Jon Rubenstein attributed Palm’s woes to a lack of market awareness, insufficient advertising, and retailers not being familiar enough with the Palm Pre to adequately showcase what it can do. The reality, though, is that the Palm Pre, for all of its strengths, was simply too little too late.
As of Monday morning, Palm shares were trading at $3.93 a share, marking yet another 52-week low for the once proud company.