Palm's Future in New Hands

The plan to elevate Palm (Nasdaq: PALM  ) has come full circle. Products chief and executive chairman Jon Rubinstein yesterday replaced company co-founder Ed Colligan as CEO.

Colligan will leave with a list of accomplishments. He helped introduce the world to the PalmPilot, which revolutionized the handheld computing market. And he was COO of Handspring when it introduced the Treo, forerunner to today's top smartphones from Apple (Nasdaq: AAPL  ) , Nokia (NYSE: NOK  ) , and Research In Motion (Nasdaq: RIMM  ) .

Still, this change is overdue. Rubinstein, brought in by investor Elevation Partners two years ago this month, has unleashed his signature product -- the Pre -- to a receptive market. The device has already set sales records for Sprint Nextel (NYSE: S  ) .

Interestingly, good sales data may not be enough: Shares of Palm were down 7.7% since Friday's close, before rising on today’s CEO news. Investors apparently want to see either (a) iPhone-sized sales, or (b) more breakthroughs. The latter seems more likely.

This is good news in a sense. Rubinstein is a proven innovator, having first led the iPod and now the Pre to commercial success. But investor expectations may be too high. Even after the recent pullback, Palm is up more than 500% since early December, thanks to nothing more than the promise of Pre.

Rubenstein's troubling task: Create further shareholder value for a stock already trading in the market's nosebleed section. At these highs, no amount of innovation may be enough.

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Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy needs a bit more coffee. Be right back.


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  • Report this Comment On June 11, 2009, at 8:02 PM, AZ123 wrote:

    Hi Tim,

    When you wrote your now infamous article, "Palm Pre: Dead on Arrival?" back in April, were you able to see the future?

    Did you see Verizon announce that they would carry the Pre in January of 2010?

    Did you see AT&T declare that they want to carry the Pre on their network as well?

    Did you see the successful reviews and sell-outs nationwide upon the phone's release?

    Did you see Rubenstein being named the new CEO?

    No? Then, what makes you think you have a clue about anything Palm related, either now or in the near term future?

    Palm actually has a strategy in place that you're unaware of, therefore, your views on Palm, now and in the future, are no longer to be taken seriously.

    You goofed big time with that ridiculous article and now you're trying to tip toe backwards, away from that article, by writing less brash garbage but still throwing in negative opinions:

    1) Interestingly, good sales data may not be enough

    2) At these highs, no amount of innovation may be enough.

    Here's why Palm's stock price will continue to rise through the end of the year and then rise some more in 2010. This came out today:

    "Palm is apparently preparing Pixie, a lower-priced follow-up to its popular Pre phone.

    The new phone is expected to be a candybar-shaped touchscreen device that would sell for $99, and it's aimed directly at the cheaper Apple iPhone.

    Palm is working with its contract manufacturing partner Compal to have the phone available for sale in the U.S. before the end of the year to take advantage of the holiday buying season, says Collins Stewart analyst Ashok Kumar.

    The Pixie would give Palm a second key product and add momentum to the fallen smartphone pioneer's remarkable rebirth.

    Starting Saturday, Palm's hotly anticipated Pre phone gave the company and telco partner Sprint an immediate sellout success. An estimated 50,000 devices sold during the debut weekend.

    On Wednesday, Palm made its leadership transition official by replacing longtime CEO Ed Colligan with Palm chairman and former Apple tech guru Jon Rubenstein.

    Now, if the Pixie arrives before Christmas, Palm would not only have another device in the market, it may also have another telco partner to sell it through. Kumar says he suspects the Pixie is being built for WCDMA networks, which would align it more with the AT&T tech camp and not with the Verizon or Sprint group.

    The Pixie phone is expected to run on Palm's new Web OS operating system. There has also been speculation that another Palm Web OS device -- dubbed EOS, is headed to AT&T later this year.

    In a note to clients Thursday, Kumar highlighted some of the suppliers that would stand to be beneficiaries of a Palm Pixie phone. He says Qualcomm would likely get the wireless modem business and Texas Instruments is in line for the graphics and applications processor supply spot.

    Palm was not immediately available for comment."

    So, Palm has a clear, forward momentum strategy in place along with a powerful operating system for an esthetically pleasing smart phone that'll be available on all three major carriers by early 2010.

    Think about this: the next iPhone that comes out with the ability to open multiple applications at once will be imitating Palm! (That's how a shift in consumer consciousness occurs)

    Honestly, your negative opinions may be you hedging your bets, but just keep an open mind about PALM, a company that's now loaded with Apple developers, now run by the guy (Rubenstein) who ushered in the iPod and iPhone AND now have one clear mission in mind: out iPhone the iPhone.

    They have new product available to Verizon and AT&T users who will want it. They're looking towards the future and the stock will continue to rise as a result.

    That's why MotleyFool readers and subscribers must stop paying attention to you and Rick Aristotle Munarriz, who wrote a recent Palm article titled, "Throw This Stock Away."

    Honestly, what are you guys thinking?

    I bought 10,000 shares of Palm when it was 2 bucks. If I'd have sold in April, based on your "Palm Pre: Dead on Arrival?" article, I'd have walked away from an additional (nearly) $40,000 as of today

    This is why your articles are irresponsible.

    This is why MotleyFool readers must ignore your short-sighted opinions and look at what a company with clear clear vision and direction, like Palm, is doing to grow in value and reward their shareholders.

    I have nothing personal against you, but your style of opinionating is one that has turned me off to The MotleyFool. The Gardner brothers have lost their way by allowing too many writers with limited insight to wrongly prognosticate and mislead investors through negative propaganda based solely on their lack of open mindedness and common sense opinions.

    If you disagree with me, all I can tell you is that I'm (nearly) $40,000 richer because I ignored you and Rick Aristotle Munarriz.

    MotleyFool readers and subscribers should keep that in mind when considering advice from both of you folks.

    Take good care and peace.

  • Report this Comment On June 12, 2009, at 9:28 AM, TMFBreakerRick wrote:

    AZ123, you do realize that Tim was one of the first analysts out there to be bullish on Pre -- and webOS -- back in January, while the stock was still trading for pocket change.

    http://www.fool.com/investing/general/2009/01/12/palm-pre-ve...

    And you also realize that my "Throw This Stock Away" piece on PALM was written when the stock was already trading in the double digits last month. 50,000 Pre units is a far cry from RIM's 25 million, but it's still a commendable start. Still, I stand by my May 27 article and invite you to give it several months -- not just two weeks -- before serving me a plate of crow. I'll eat it then, if it's still warm.

  • Report this Comment On June 12, 2009, at 7:30 PM, AZ123 wrote:

    Hi TMF,

    Any article with a headline and suggestion to "Throw This Stock Away" is more sensationalist fodder than level-headed analysis. MotleyFool readers and subscribers, looking for genuine data before they invest their hard-earned dollars look for the steak of legitimate analysis, not the sizzle of tabloid-styled headlines and taunts.

    Are you willing to stand by your position that Palm is a throw away stock, after it comes out on Verizon and AT&T, in addition to Sprint?

    Are you willing to predict that the stock price will drop significantly to "throw away status," even within the next 12 months?

    Looking at where my position in Palm stock was at when the "Throw This Stock Away" article was published and where it closed today, I'd have walked away from $33,000. That's right, thirty three thousand dollars thrown away had I followed the advice of that article.

    As for Mr. Beyers, despite being bullish on Palm back in January, he still issued an article displaying obvious negative views toward Palm stock in April. He didn't use any technical analysis, but rather, a survey of just 4,000 non-Sprint users who weren't very familiar with Palm's new, upcoming phone.

    He also used that article to taunt and ridicule Palm, rather than post solid technical data to support his negative view of the stock by his April 15th article.

    Only because I called him out, did he release a more balanced follow-up article with sound analysis, which I proceeded to publicly praise him for.

    I'm not a jerk, just a fed up investor who is tired of your and other writers' lazy approach that's pushing services like The MotleyFool towards tabloid-styled e-rags.

    A service like the MotleyFool newsletter is only as good as the intelligence of its writers.

    When you suggest to "Throw Away This Stock" and the stock goes on to earn me $33,000 since then...who's the "Fool?"

    Take good care and peace.

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