It appears that sales of the Palm Pre and Pixi are not meeting some expectations. Both Macquarie Research and Merrill Lynch downgraded their stock ratings on Palm, triggering a stock sell-off today.
Palm launched its webOS operating system to great fanfare over a year ago but is facing stiff competition in the mobile space. According to Macquarie Research, Palm sales at Verizon are improving but are coming off a “very low base” while Palm sales at Sprint appear to have stalled. Merrill Lynch now expects that Palm will sell 900,00 units instead of the originally forecast 1.1 million in its FY Q3 and 1.2 million in FY Q4 (down from original estimates of 1.5 million). On the other hand, Stifel Nicolaus analyst Sanjiv Wadhwani offers a more optimistic outlook, expecting that Palm could sell as many as 1.4 million units per quarter this year.
What does Palm have to do to improve its fortunes? Does it need to partner with additional carriers or release new devices? Or are rumours of Palm getting bought out or going bankrupt going to reappear?