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Saturday, December 08, 2007

Wall Street Pushing For Changes at Palm after Logistics and Warranty Problems

Palm seems to be facing even more problems with its business these days.  Wall Street was quick to react this week when it was learned that Palm would miss its numbers due in part to product logistics issues that will prevent some units for making it in time for the Christmas season.  Even more troubling possibly our reports about warranty repair expenses coming in higher than expected and pressuring the bottom line.

When warranty repair expenses hit a company, this often times signifies both quality issues as well as internal control issues and accounting issues with reserves.  

Palm said a delay in certification of one of its products would cause a shortfall in revenue for its second fiscal quarter, which ended Nov. 30. The company said revenue will come in between $345 million and $350 million compared to its previously expected range of $370 million and $380 million for the period.

In addition, an "unforeseen increase in warranty repair expenses" will put pressure on the bottom line. More pressure will come from strong sales of the popular but lower-priced Centro device. Palm sells off as Wall Street questions management - MarketWatch

Editorial Disclosure - As a long time Palm product user myself, I have seen a significant decline in quality as I upgraded from an older Palm treo 600 to a Palm treo 700 running on the Verizon network which does not function terribly well with the 700.  I suspect that there may be opportunities for Palm to rectify this issue as Verizon opens up its network and enables people to avoid their tediously poor Verizon branded services that seem to run my device into the ground.  I have seen an improvement in synchronizations, which could be attributable to better cables or to better software.  Maybe if Palm could run its own software and its devices instead of Verizon software, they might see fewer warranty repairs at lease from that carrier.