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We Told You So: Paltry Sales Pummel Palm


Today, Palm (PALM) announced it is reducing its full-year revenue outlook to “well below” previous targets of $1.6 billion to $1.8 billion. The biggest reason is weak demand for the company’s Pre and Pixi smart phones, which have been overshadowed by rivals like the iPhone from Apple (AAPL) and the Google (GOOG) powered Droid, which have a more established tech following and many more apps and programs at their disposal.

This sales shortfall may be news to some folks, but not to those who pay attention to consumer research conducted by ChangeWave. A late-December survey showed that the iPhone and the Droid were head and shoulders above their competitors. Though Research in Motion (RIMM) was managing to hang tough with its BlackBerry offerings, Palm was clearly the least popular out of all the smart phone manufacturers.

For instance, in December 2009 when over 4,000 consumers were asked which mobile OS they wanted most if purchasing a new handset, a minuscule 3% picked Palm. What’s worse, this was down dramatically from the already abysmal 6% who said they’d pick Palm when ChangeWave asked the same question in September 2009.

Palm’s lowered guidance due to weak smart phone sales appears to reflect this waning appeal of its handsets. Shares are being punished big time–with a stumble of as much as 20% today alone. A Bank of America/Merrill Lynch downgrade from to “underperform” with a new price target of just $10 a share for PALM has really taken its toll.

Some are already predicting that this is the beginning of the end for the device maker. But as many tech companies have proven in the past, all Palm needs is one good idea and it can quickly return to favor.

As for what lies ahead with Palm — and rivals Apple (AAPL) and Research in Motion (RIMM) — stay tuned for the upcoming February smart phone survey from ChangeWave.

Article printed from InvestorPlace Media,

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