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  1.    #1  
    PalmOne Backlog Has Investors Backing Out
    By Troy Wolverton Staff Reporter
    12/17/2004 12:37 PM EST

    Shares of palmOne (PLMO:Nasdaq) plunged Friday after investors were unnerved by the company's earnings report.

    The stock was recently down $8.57, or 20.1%, to $33.98.

    Although the device maker met the Street's earnings expectations for its second quarter, it issued disappointing guidance for its current quarter. Perhaps more disturbingly, the company reported a sizable backlog in its inventory, particularly in its flagship Treo line of smartphones.

    A related concern among analysts was the inventory position held by the company and its partners. At the end of the second quarter, palmOne and its carrier partners were holding nearly 21 weeks worth of Treo smartphones in inventory. Additionally, the company and its distribution partners held another 9.6 weeks worth of inventory in its handheld devices. Both of those figures are well above the company's targets, analysts noted.

    Company officials played down the inventory swell. Handheld inventory was at a reasonable level considering that distributors and retailers were bulking up for holiday sales, Morali said. Meanwhile, the smartphone inventory had much to do with the transition from the older Treo 600 to its recently released Treo 650, he said.

    "Carrier partners that are currently only selling the 600 have indicated that they are satisfied with their inventory position going into the holidays," said Morali. "Therefore we are comfortable with current channel inventory levels."

    Again, the company's comfort didn't necessarily console Wall Street. In order to reduce its inventories to more normal levels, the company will have to double its market share in the smartphone market in its fourth quarter from its third quarter, wrote Needham analyst Charles Wolf in a note issued Friday.

    "Given the Treo's $600 retail price point before carrier subsidies, we believe that such an increase in market share is highly unlikely," Wolf noted, maintaining his "hold" rating on palmOne shares. (Needham has provided investment banking business for palmOne in the last year.)
  2. #2  
    They need to slash Treo prices fast!!!

    Btw gekko, do you know what's up with PIC? Haven't heard from Ryan in a while...
    aka Gfunkmagic

    Current device: Palm Pre
    Device graveyard: Palm Vx, Cassiopeia E100, LG Phenom HPC, Palm M515, Treo 300, Treo 600, Treo 650, Treo 700p, Axim X50v, Treo 800w

    Please don't PM me about my avatar. For more info go here.

    Restore your Pre to factory settings using webos doctor and follow these instructions
  3.    #3  
    Gfunk - I just posted that article over at PIC AND I busted your chops a little bit! Go take a look!

    PIC forums are still down, few posts on the main page, Ryan is still sick, and PIC is on a "holiday break".

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