Is This Palm's Death Knell?

By Anders Bylund | More Articles
April 5, 2010 | Comments (6)

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"For whom the bell tolls
Time marches on
For whom the bell tolls"
-- From "For Whom the Bell Tolls" by Metallica, 1985

Verizon (NYSE: VZ ) is either doing Palm (Nasdaq: PALM ) a huge favor right now -- or reading the handset maker's last will and testament.

You can get a Palm Pre Plus for a measly $50 right now, or a Palm Pixi Plus for $30. Those are two massive price cuts, considering that the Pre Plus cost $150 last week, even with the requisite 2-year Verizon Wireless service contract. The original Palm Pre, which was supposed to save Sprint Nextel's (NYSE: S ) bacon last year but never did, launched at a $199 price point.

Verizon's curious move raises two distinct possibilities:

Pres and Pixies are cluttering up store shelves and warehouses, unsold and untouched, and Verizon is desperate to get rid of this worthless junk. That would be the last will referenced above.
Verizon wants to promote these models for whatever reason, and it's willing to subsidize them just to get the ball rolling. In this case, Verizon's marketing power might pull Palm up by the bootstraps. Maybe.

The second option is not as grim as the first from Palm's point of view, but either way suggests that the Pre's fizzled launch wasn't Sprint's fault. Verizon can't sell the darned things, either, short of taking drastic measures.

And the wireless giant certainly has reason to clear some space on those shelves. Google (Nasdaq: GOOG ) and its Android partners want to push out a few new models to Verizon this summer, and if the stars align just right, there might even be an Apple (Nasdaq: AAPL ) iPhone on Verizon's horizon, too. A deluge of smartphones are coming to sweep away Palm -- and maybe even Research In Motion's (Nasdaq: RIMM ) BlackBerry.

Does Palm have one last trick up its sleeve, or did the bell just toll for the company that made PDA gadgets cool? Discuss in the comments below.

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Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. All April long, he frolics in the joys of National Poetry month. Sprint Nextel is a Motley Fool Inside Value choice. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On April 05, 2010, at 4:18 PM, wetlands001 wrote:

Verizon is simply cleaning their shelves from this item that is just occupying space and doesnt' sell.
Report this Comment On April 05, 2010, at 4:28 PM, burmamonster wrote:

I don't think so. Verizon might clean up their inventory or promote palm, either way is good news for palm software platform. One of the key for iphone success has thousands of attractive iphone application. The only way palm can have applications are exposure to the customers. And the more people create applications for palm, the more attractive palm phones are. So, that's a good thing and good news for palm!!..
Report this Comment On April 05, 2010, at 9:47 PM, InfoThatHelp wrote:

Look around, folks, customers just ain't buying anything that's not Apple. Verizon can't give away them Rim BOGOberrys which have fleed NA to the mud huts and ancient villages offshores. Palm is patiently waiting for the Great Recession to go away. Motorola is busy kicking blackberry butts.
Expect Rim to go bankrupt in NA and re-establish itself in North Korea.
Palm Pre is perfunctorily the premier business mobile device waiting for the business app developers to get off their collective asses.
Motorola is going to be the boss's machine picking up where Apple left off for the sake of the masses.
Report this Comment On April 05, 2010, at 9:57 PM, Mstinterestinman wrote:

Palm is starting to look like a really good short at this point. I think a bankruptcy next year is becoming quite likely they are burning through a ton of cash and their only options soon will be issue shares or debt neither will gain much joy from investors.
Report this Comment On April 05, 2010, at 10:04 PM, burmamonster wrote:

For ozzfan1316: Is it too early to say a bankruptcy next year? Come on, it's still April...!.,Let them sell their phone with ATT, and with China for this summer,..:)
Report this Comment On April 05, 2010, at 11:47 PM, Clint35 wrote:

I think Palm is as good as dead. At this low a price I don't even think it would be worth shorting.

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