Originally Posted by Kupe:
In general, this might be true of a low-return-rate (i.e. 1%) product. What this doesn't take into account is the number of phones in refurb limbo.
Sell in = Pres shipped by Palm
Sell through = Pres sold by retailers (Sprint, BB, Radio Shack)
Refurbs, on the other hand, are phones in channel that have already been tagged as sell-in and sell-through, but generate no revenue either in sales or in monthly fees. The 13,000 Pre difference is most certainly new stock at retailers (which adds up to a fraction over one new Pre per retail outlet when you add up all the potential sites), but doesn't account for the refurbs moving around through the system. At a mere 5% return rate (an industry low), that would account for another 25,000-34,000 Pres (based on 500,000 to 680,000 sold) not generating any sales or monthly revenues for Sprint or Palm. The number of refurbs is probably higher than that (for example this link which would make the refurb numbers closer to 50,000-75,000 total). That's a lot of phones in the system not generating $100 in monthly revenues, but sucking up shipping, repair, storage, and inventory costs.
Just a thought.
Even if returns rates were that high, Palm's huge increase in non-GAAP revenues from $113 million in Q4 2009 to $360 million in Q1 2010 would belie that conjecture. Moreover, the monthly revenues generated from ownership go to Sprint, not Palm since no app sales are included which would be the only monthly income they receive outside of sales.