You know it's bad when revenue declines more than 50% sequentially. That's exactly what Palm (Nasdaq: PALM) now projects for its business.

"Given the level of sell-through volumes reported today and the shipments delivered late in Q3, we currently expect fourth quarter revenue to be less than $150 million," Chief Financial Officer Doug Jeffries said in a conference call with analysts yesterday.

Analysts had been projecting $306 million in revenue for the current quarter, a modest drop from the $349.9 million in fiscal Q3 revenue Palm reported last night. They weren't counting on the company's inability to sell hundreds of millions of dollars' worth of inventory. (Total inventory was up more than 55% from the close of the 2009 fiscal year.)

Verizon (NYSE: VZ) is partly to blame. Earlier hopes for a lucrative partnership with the carrier appear to have been optimistic. Even Sprint Nextel (NYSE: S), Palm's closest carrier friend, is dating other suppliers, including Google (Nasdaq: GOOG). Sprint says it will soon carry the Nexus One smartphone, reports Dow Jones Newswires.

Wall Street, too, is abandoning Palm. CNN reports that at least two analysts now value Palm at $0. Foolish colleague Rich Smith was arguing this very point a month ago. He looks prescient today.

And let's not forget that early research pegged the Pre smartphone as dead on arrival. Palm has defied those expectations, but not by much. The zombie business that remains has too much inventory, too much competition from Apple (Nasdaq: AAPL), Nokia (NYSE: NOK), and Research In Motion (Nasdaq: RIMM), and too little support from software developers to reanimate its stock.

Better to leave this one for dead. Think I'm wrong? Is there more to the story? Please take a moment to vote in the poll below. You can also share your thoughts in the comments section.