Savitz on the Fall of Palm

I thoroughly enjoyed Eric Savitz‘s Can Anyone Rescue Palm ($PALM) from its Death Spiral in this weekend’s Barron’s.

Savitz goes back just far enough to give readers the quintessential story of a classic failed turnaround.  At the end of the day,  Palm’s failure is less a story of poor execution and more a story of tough-as-nails competitors like $RIMM and $AAPL.

Palm in the past few months has done many of the things it promised. It expanded from one phone, the Pre, to a second, lower-cost model, the Pixi. After launching service on Sprint (S), it added Verizon Wireless (VZ) as a second carrier and unveiled new versions of the existing phones, the Pre Plus and the Pixi Plus. After a slow start, it now has a steadily expanding number of applications in its equivalent of the Apple App Store. It has added carriers outside the U.S. And it has shelled out big bucks for a splashy advertising campaign.

There’s just one problem: No one is buying the phones.

There are a few questions that weren’t asked or answered in the story that I believe would be of great interest to all investors.  These include:

  • Why did the sell-side research cadre get behind the company so early?  Virtually every major firm was cheering Palm on from the beginning of its latest turnaround – were their buy ratings based on a desire to root for the underdog?
  • How did the tech guys get it so wrong?  The Pre and Pixi caught on with the gadget guys, so why not the people?
  • Can we extrapolate Palm’s dissatisfaction with Verizon’s marketing assistance and figure out just how make-or-break the involvement of a carrier is in terms of tech product launches?

The smartphone market was Palm’s to lose 5 years ago…and they certainly lost it.


Can Anyone Rescue Palm from its Death Spiral (Barron’s)


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