Palm CEO Jon Rubinstein sought to reassure his company's employees yesterday in the wake of Palm's revenue warning, telling employees that he still believes the company "has what it takes to get the job done."
In a letter to employees obtained by the Wall Street Journal, Rubinstein said he knew the news was "difficult to swallow," but that the company made the announcement "to prevent a surprise for Wall Street when we announce quarterly earnings in March." The company said it expects revenue in the current quarter to be between $285 million and $310 million on a GAAP basis, well below most analyst estimates of around $425 million. Palm said that, as a consequence, it now expects full-year revenue to be "well below" its previous estimate of between $1.6 billion and $1.8 billion.
Rubinstein said that he and Dave Whalen, Palm's senior vice president for global sales, recently had a "very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales." Verizon launched the Pre Plus and Pixi Plus in late January.
Rubinstein said Palm kicked off "Project JumpStart" nearly three weeks ago to boost sales, an effort that includes nearly 200 Palm "Brand Ambassadors" and Palm employees training Verizon sales reps on Palm's webOS devices. Rubinstein said early results have shown improvement, and that Palm would be boosting its own marketing campaign as well.
In a research note, UBS analyst Maynard Um said Palm's financial wobbling could portend continuing troubles. "The key question remains whether better execution, potential price cuts and marketing/promo activity can drive greater demand/scale to drive profitability," he wrote. "However, we note typically handsets see greatest volume uptick on initial launch (pent up demand) and then normalize, making the unit challenge greater."
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