Palm CEO: WebOS bigger than just the Pre base

Despite reporting dismal quarterly results, CEO says company is strategically on track and will launch the Pre on time. Palm envisions an entire product line built on its new WebOS.

Larry Dignan
3 min read

This was originally posted at ZDNet's Between the Lines.

Updated: Amid weak fiscal third-quarter results reported Thursday, Palm Chief Executive Edward Colligan said that the company is well positioned to launch the Pre and promised a road map of smartphones and an application ecosystem built on the company's new WebOS. Bottom line: Palm envisions an entire product line built on the WebOS.

Palm hasn't put a date on the Pre launch. Corrine Schulze/CNET

Palm didn't put a date on the Pre launch, but said the device and its software were "being polished up" and being certified from Sprint as the company prepares to ramp up manufacturing.

The big takeaway: There are no showstoppers for the Pre launch in the first half of the year. Chief Financial Officer Doug Jeffries also added that "there's an enormous amount of interest globally for the Pre." Palm execs weren't going to detail European partners, but did note that the Pre plan calls for a step-by-step addition of international partners. "Right now we're 100 percent focused on getting the Pre launched and the Sprint product out the door," said Jeffries.

On a conference call with analysts, Colligan provided an upbeat tone to what were predictably dismal results. The company reported a net loss of $98 million, or 89 cents a share, on revenue of $90.6 million, down from $312 million in the same quarter a year ago. Smartphone revenue fell 72 percent to $77.5 million.

"With these financial results it's easy to forget the progress we've made," said Colligan, who argued that strategically the company is on track.

Colligan said the company is well positioned to launch the Pre on time. "We are under no illusions about the hard work that remains with bringing the Pre to market," said Colligan. But he added that "I have never had more confidence in Palm's ability to bring a new product to market on time and at scale."

However, analysts asked Palm executives what made them comfortable that the Pre would launch on time. After all, the Treo Pro was delayed. Jeffries said Palm has been working "more collaboratively" with Sprint and the company understands the process to launch more. "It's never a slam dunk, but I'm as comfortable as I've ever been that we'll nail it," said Jeffries.

Colligan delivered the following points:

  • The company needs seamless execution on the Pre launch.

  • Palm is "working hard with developers to get applications ready at launch" and "aligning marketing efforts with Sprint."

  • Palm wasn't prepared to disclose a European partner for the Pre, but the company has some "excellent options."

  • The company plans to establish a WebOS ecosystem that goes "well beyond our base."

  • Palm wasn't going to discuss its cash burn situation in the fourth quarter, but said its latest move to raise capital gave the company enough headroom to launch the Pre.

The messaging from Palm can be boiled down to one statement: Look ahead. Jeffries said the company's cost cutting and the launch of the Pre--along with its WebOS--will "greatly improve" performance.

Indeed, Palm will need the improvement. Palm smartphone units plunged 42 percent to 482,000 in its fiscal third quarter ahead of the launch of the Pre.

The results were largely expected since Palm had already warned that its third-quarter results would be messy. The company in a statement said it is officially "proceeding through a challenging transitional period" ahead of the Pre launch.

If successful, the launch of the Pre, Palm's much ballyhooed device, will create a new era for the company. If the Pre fumbles, Palm could be in big trouble.

The third-quarter net loss included a bevy of items, but even under non-GAAP accounting Palm lost $94.7 million, or 86 cents a share. Inventories for the third quarter were $13.2 million, up from $8.89 million in the same period a year ago.

On the bright side, Palm recently raised capital that largely offset what it blew through during the third quarter. The company ended the third quarter with cash and equivalents of $219.4 million. Jeffries repeatedly noted that Palm had enough capital to give the Pre the marketing support it needs.

Also see: The war for mobile developers is on: Do you have to pick sides?