According to a note sent out by Lehman Brothers analysts, the Treo 700w launch may - at least initially - not be as beneficial for Palm as expected:
Quote:
Palm's guidance suggests approximately 560,000 units in the February quarter. As we do not believe channel inventories have much room to rise, we believe Palm must expect sell through to match sell in during February. This would imply approximately 30% sell through growth in the February quarter. Given that this is a seasonally slower quarter for handset demand, the arrival of the 700w is likely to dampen 650 demand further, and that RIM, Motorola, and Nokia either have or will shortly launch new products, Palm appears to be placing a significant amount of weight on its 700w launch. The company has indicated for some months it has the orders to back this growth up. Given anecdotal checks with Verizon, we do not doubt the strength of 700w demand. We are not certain, however, the 700w strength will come in time to bolster the February quarter.
Applying a normal seasonal 15% downtick in handset sales in the first quarter to Treo sell through yields 370,000 units. Variables for a 15% assumption include 1) Palm may benefit from the fact that its quarter includes the month of December but may suffer from 2) the aging of the 650. Nevertheless, should 650 sell through decline to 370,000 units, we believe Palm would need to sell approximately 180,000 700w to reach its guidance. Given that 700w distribution may not reach full strength until the sixth or seventh week of the quarter, this math is aggressive in our view.
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Wasn't it TadW who did
already ask why Palm missed the '05 Christmas season? Palm stock is currently down by 2%.
[via
CE Stock Blog]