Troubled times for the former leader of the smart-phone industry continue.
Palm’s new Pre receives accolades, but isn’t scheduled to ship until closer to June (the official target is the first half of the year).
Palm Pre to reach the market by June, but current smart phone sales are slumping
In anticipation, the company’s present smart phones are tanking and the stopgap Treo Pro is late. That means Palm is burning money to stay alive: between $95 million and $100 million in the third quarter ended Feb. 27.
That will leave it will between $215 million and $220 million in the bank, not enough of a cushion to satisfy management.
On Tuesday, Palm said it would raise more money to conduct the Pre launch and weather the downturn. It also said third-quarter sales were roughly three-fifths of what they were expected to be: between $85 million and $90 million compared with the $157.8 million Wall Street had projected.
In this environment, the options aren’t plentiful. Here’s the plan: to exercise some of the shares underlying the Series C preferred stock owned by Elevation Partners.
In other words: convert up to 49 percent the Series C convertible preferred warrants Elevation received for a $100 million investment into common stock and sell them on the market. If they sold at $7, Palm would raise $67.5 million. (Thanks to Barron’s Tech Trader Daily for the details.)
“As expected, we’ve got a difficult transition period to work through,” said Palm CEO Ed Colligan.
[...] that happens, the Apple iPhone will have been out for almost 4-years! Unless Palm survives long enough to launch its Pre smartphone with multi-touch [...]