Why is it a turkey? Palm started the year off on a high note, but its comeback sputtered so badly that it needed to be rescued by Hewlett-Packard to avoid financial oblivion.
In January, Verizon Wireless (NYSE: VZ) began selling the Pre Plus and the Pixi Plus at $149.99 and $99.99, respectively, after a $100 mail-in rebate. The webOS devices were not all that different from their previous incarnations at Sprint Nextel (NYSE: S), but the deal gave Palm distribution at the nation's largest wireless carrier. AT&T Mobility (NYSE: T) also pledged to support Palm's phones.
However, analysts started worrying in late February about sales at Verizon. Days later, Palm slashed its fiscal third-quarter and full-year revenue targets, citing slower-than-expected sales of its webOS products. Then-CEO Jon Rubinstein told employees in a memo that the Verizon launch was "below expectations," but that Palm had kicked off "Project JumpStart" to boost sales, an effort that included nearly 200 Palm "Brand Ambassadors" and Palm employees training Verizon sales reps on Palm's webOS devices.
Subsequently, Verizon jettisoned its $100 mail-in rebate requirements for the phones, which still didn't seem to spark sales. By early April the carrier turned desperate, dropping the Palm Pre Plus down to $49.99 and the Pixi Plus down to $29.99, both with a buy-one-get-one-free promotion.
Palm's fiscal third quarter was telling--the company still was not gaining traction. Palm shipped a total of 960,000 smartphone units during the quarter, but smartphone sell-through for the quarter was 408,000 units, down 29 percent from the second quarter and down 15 percent year-over-year. Rubinstein described the smartphone vendor's struggles as "disappointing" and "frustrating," but said he remained confident the company could turn things around. He said market chatter around Palm going out of business "defies logic."
Then the real fun began. On April 12, Bloomberg reported that Palm was looking for a buyer, news that touched off weeks of speculation over which company would nab Palm and its highly-praised webOS. Hewlett-Packard stunned the industry by announcing April 27 that would buy Palm for $1.2 billion. And with that, Palm's run as an independent company came to a close.