Palm shares fall on concerns about Pre supplies
NEW YORK, June 8 (Reuters) - Shares of Palm Inc PALM.O fell nearly 9 percent on Monday amid concerns that early sales of its highly anticipated new phone, the Pre, fell short of expectations and that its launch might be overshadowed by supply constraints.
The stock decline comes two days after Palm kicked off sales of Pre to small crowds at many of the stores operated by Sprint Nextel (S.N), the exclusive U.S. provider of the phone. Pre is seen as a rival to Apple Inc's (AAPL.O) iPhone and Research In Motion Ltd's (RIM.TO) BlackBerry.
But CL King and Assoc analyst Lawrence Harris said shipments appeared to be far less than he had the expected, and that shoppers who missed their chance might have to wait a while.
"We now estimate that Palm shipped 50,000 Pre units in May, compared with our prior estimate of 100,000," he said in a note to clients. "Our experience suggests that ramping up production of the Pre could take some time."
Harris changed his outlook for Palm's fiscal 2010 loss to 75 cents a share from 70 cents.
At around 50,000 units, first-weekend sales would also be less than the 146,000 for the 2007 launch of the first-generation Apple iPhone, analysts added.
Seen as a pivotal device for both Palm and Sprint, Pre sales started just before a developers conference today, where Apple is widely expected to announce a new iPhone.
Looking beyond the early sales figures, FBR Capital Markets analyst David Dixon said the Pre introduction could spark financial improvement at Palm.
"We expect (Palm's) share of gross industry post pay additions ... to be further enhanced by the combination of expected Palm Pre success, enhancements to the company's product line-up in second-half 2009 ... and the conversion of a higher-than-expected level of Palm users in the customer base, which we believe is in the 2-3 million range," he said.
Palm shares were down $1.13, or 8.7 percent, at $11.87 in afternoon Nasdaq trading.
(Reporting by Franklin Paul; Editing by Lisa Von Ahn)
((Email: Franklin.Paul@thomsonreuters.com; +1 646 223 6195; Reuters Messaging: Franklin.Paul.reuters.com@reuters.net))
(To read more about our Media news, visit out MediaFile blog online at blogs.reuters.com/mediafile ) Keywords: PALM/SHARES
(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN08319496
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
Follow Reuters