Pre to Win IPhone Users After Contracts, McNamee Says
Palm Inc.’s new Pre smart phone will lure customers away from Apple Inc.’s iPhone when subscribers’ contracts start expiring in June, Palm investor Roger McNamee said.
“You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone,” McNamee said today in an interview in San Francisco. “Not one of those people will still be using an iPhone a month later.”
Sprint Nextel Corp., the phone’s exclusive carrier, and Palm have said they will start selling the device in the first half of the year. Palm, which pioneered mobile devices with its Pilot products more than a decade ago, is counting on the Pre to help reverse six straight quarters of losses totaling more than $650 million.
“The timing and success of the Palm launch is now the critical factor,” said Maynard Um, an analyst at UBS AG in New York, who expects a late June release. This week, Palm posted preliminary third-quarter sales that fell short of analysts’ estimates by as much as 50 percent, citing waning demand for older models. The company is scheduled to report full results March 19.
The Pre features a full touch-screen cover that slides up to reveal a Qwerty keyboard, designed to appeal to both iPhone fans and traditional smart-phone users. Speculation about the price and the release date has circulated on the Web since Sunnyvale, California-based Palm unveiled the Pre in January at the Consumer Electronics Show in Las Vegas.
Release Timing
Michelle Leff Mermelstein, a spokeswoman for Overland Park, Kansas-based Sprint, didn’t return a call seeking comment. Palm spokeswoman Leslie Letts declined to comment beyond Palm’s previous statements.
Palm fell 44 cents to $6.62 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have more than doubled this year. Sprint dropped 25 cents to $3.07 on the New York Stock Exchange.
Apple, based in Cupertino, California, introduced the first iPhone in June 2007 with AT&T Inc., selling the touch-screen device with a two-year contract. The latest model, the iPhone 3G, is the most popular smart phone among consumers, according to researcher NPD Group Inc.
‘Coolest Product’
“Think about it -- If you bought the first iPhone, you bought it because you wanted the coolest product on the market,” said McNamee, 52. “Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”
McNamee is a co-founder of Elevation Partners, the investment firm that agreed in December to pay $100 million to lift its stake in Palm to 39 percent from 25 percent. His firm, whose partners include U2 singer Bono, invests in four other companies, including Forbes Media LLC.
Palm is “by far” Elevation’s largest investment, said McNamee. “I’m there about three times a week, mostly with the engineers,” he said. “We have seven people who work on Palm, three of whom do nothing but work on Palm.”
Palm’s development costs remain high even as sales of existing phones like the Treo decline, Standard & Poor’s analyst Bruce Hyman said yesterday. He cut Palm’s credit rating to CCC, eight levels below investment grade, from CCC+ and said the company’s dwindling supply of cash is likely to lead to further downgrades in the next two quarters.
10-Year Plan
Palm said March 3 it had cash and equivalents of between $215 million and $220 million at the end of February. While it called the amount “sufficient,” it said it plans to boost cash levels to combat the recession.
The economic slowdown “is an enormous risk for everybody in this marketplace -- but I don’t care,” said McNamee.
Palm’s newer operating system will give it an edge, McNamee said. The underlying technology for Research In Motion Ltd.’s BlackBerry is about 13 years old, while the technology behind the iPhone goes back almost nine years, he said.
Apple spokesman Steve Dowling didn’t immediately respond to an e-mail seeking comment.
“I’m on a 10-year plan, here,” McNamee said. “They are going to run out of gas way before we are.”
source
“You know the beautiful thing: June 29, 2009, is the two- year anniversary of the first shipment of the iPhone,” McNamee said today in an interview in San Francisco. “Not one of those people will still be using an iPhone a month later.”
Sprint Nextel Corp., the phone’s exclusive carrier, and Palm have said they will start selling the device in the first half of the year. Palm, which pioneered mobile devices with its Pilot products more than a decade ago, is counting on the Pre to help reverse six straight quarters of losses totaling more than $650 million.
“The timing and success of the Palm launch is now the critical factor,” said Maynard Um, an analyst at UBS AG in New York, who expects a late June release. This week, Palm posted preliminary third-quarter sales that fell short of analysts’ estimates by as much as 50 percent, citing waning demand for older models. The company is scheduled to report full results March 19.
The Pre features a full touch-screen cover that slides up to reveal a Qwerty keyboard, designed to appeal to both iPhone fans and traditional smart-phone users. Speculation about the price and the release date has circulated on the Web since Sunnyvale, California-based Palm unveiled the Pre in January at the Consumer Electronics Show in Las Vegas.
Release Timing
Michelle Leff Mermelstein, a spokeswoman for Overland Park, Kansas-based Sprint, didn’t return a call seeking comment. Palm spokeswoman Leslie Letts declined to comment beyond Palm’s previous statements.
Palm fell 44 cents to $6.62 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have more than doubled this year. Sprint dropped 25 cents to $3.07 on the New York Stock Exchange.
Apple, based in Cupertino, California, introduced the first iPhone in June 2007 with AT&T Inc., selling the touch-screen device with a two-year contract. The latest model, the iPhone 3G, is the most popular smart phone among consumers, according to researcher NPD Group Inc.
‘Coolest Product’
“Think about it -- If you bought the first iPhone, you bought it because you wanted the coolest product on the market,” said McNamee, 52. “Your two-year contract has just expired. Look around. Tell me what they’re going to buy.”
McNamee is a co-founder of Elevation Partners, the investment firm that agreed in December to pay $100 million to lift its stake in Palm to 39 percent from 25 percent. His firm, whose partners include U2 singer Bono, invests in four other companies, including Forbes Media LLC.
Palm is “by far” Elevation’s largest investment, said McNamee. “I’m there about three times a week, mostly with the engineers,” he said. “We have seven people who work on Palm, three of whom do nothing but work on Palm.”
Palm’s development costs remain high even as sales of existing phones like the Treo decline, Standard & Poor’s analyst Bruce Hyman said yesterday. He cut Palm’s credit rating to CCC, eight levels below investment grade, from CCC+ and said the company’s dwindling supply of cash is likely to lead to further downgrades in the next two quarters.
10-Year Plan
Palm said March 3 it had cash and equivalents of between $215 million and $220 million at the end of February. While it called the amount “sufficient,” it said it plans to boost cash levels to combat the recession.
The economic slowdown “is an enormous risk for everybody in this marketplace -- but I don’t care,” said McNamee.
Palm’s newer operating system will give it an edge, McNamee said. The underlying technology for Research In Motion Ltd.’s BlackBerry is about 13 years old, while the technology behind the iPhone goes back almost nine years, he said.
Apple spokesman Steve Dowling didn’t immediately respond to an e-mail seeking comment.
“I’m on a 10-year plan, here,” McNamee said. “They are going to run out of gas way before we are.”
source
Posts
No comments: