The story doesn't get better as far as third-quarter guidance is concerned, either: Palm now expects a new revenue range of $310 million to $320 million, when most analysts expected revenue to be flat from whatever the company reported today.
Additionally, there were some optimists out there that had expected, since the Treo 755p had finally begun shipping, that Palm might see a little bit of a revenue upside surprise. Not the case; the red ink will also widen. The company is now expecting a third quarter loss of 14 to 16 cents per share; analysts had expected something closer to 9 or 10 cents.
James Faucette from Pacific Crest Securities says the revenue guidance shortfall may come from the company, not including sales of its new Centro $99 smart phone, as its exclusive arrangement with Sprint expires and the device becomes available on new networks. That's something that will likely come up on the call. If the company is, in fact, including those expected sales of the Centro as it starts to appear on other networks, then yes indeed, he says, this report is as ugly as it looks.
Surprisingly, there was no mention in the company's release about its widely speculated workforce reduction, which has eliminated anywhere from 10 percent to 25 percent of the company's payroll this past quarter.
Another surprise, at the end of its comments: "The company will suspend specific financial guidance in future quarters, but will continue to provide general business guidance and comments on industry trends." That's never good to read.
Likely topics on the conference call will also include Chief Executive Ed Colligan's future; and, of course, whether new investor Elevation Partners -- now controlling 27% of the company's stock -- has any plans to take the company private. It's far more affordable to do something like that today: Palm shares are getting crushed on this news, down almost 10% on Tuesday, and off 65% this quarter alone.
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