The management of Palm (NASDAQ:PALM) seems to use a different dictionary than I do. Specifically, its definition of "market opportunity" is way different from mine.

My book says that it is "a newly identified market or product gap within a market which a company can exploit." You know, like the sudden thirst for online video being filled by Google's (NASDAQ:GOOG) YouTube, or the lack of affordable, convenient movie rentals that eventually spawned Netflix (NASDAQ:NFLX).

Palm, on the other hand, seems to think that it means "demand for our core products, so strong that sales plummet while profits and cash flows sink deep into the red ink." I'm paraphrasing, of course. CEO Ed Colligan seems to think that simple cell phones will be replaced by billions of smartphones, and "there is a huge market opportunity" in it for Palm. But I think my interpretation is closer to the truth.

In the just-reported second quarter there was 11% lower revenue compared to the year-ago period, along with negative operating cash flow and net income. The warehouses are swelling up with unsold inventory, and accounts receivable dropped faster than either sales or profits, which looks like a weak trend in incoming orders.

The inventory buildup happened because Verizon (NYSE:VZ) dragged its feet releasing the latest and greatest Treo phone. There's another weakness for you: The fortunes and whims of just one customer can make or break Palm's results.

So I don't quite see how unenthusiastic partners and slower sales add up to much of a market opportunity. But somebody sees something of value. Private equity firm Elevation Partners took 25% ownership of Palm at the start of the quarter and installed two former Apple (NASDAQ:AAPL) executives on its board of directors. U2 singer and Nobel Peace Prize nominee Bono is one of Elevation's founding fathers.

Palm + vintage Apple + rock star cred could add up to something intriguing, but nobody has told us yet what that might be. For now, it looks like the smartphone opportunity is slipping away from Palm and into the palms of market leaders like Apple, Research In Motion (NASDAQ:RIMM), and Nokia (NYSE:NOK).

Maybe Bono is rewriting the English dictionary?

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Palm has one thing in common with Netflix -- both are official Motley Fool Stock Advisor picks.

Fool contributor Anders Bylund owns shares in Google and Netflix, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure always gets the story straight.