Palm CEO Rallies Team After Warning Wall Street

Palm CEO Jon Rubinstein dispatches a companywide memo assuring his team that plans are in place to boost WebOS sales and increase mobile brand awareness. Palm has warned Wall Street that third-quarter revenue isn't going to hit the mark.

Palm CEO Jon Rubinstein reportedly sent out a memo to all company employees, after warning Wall Street Feb. 25 that Palm's fiscal 2010 third quarter wasn't going to meet expectations.
Rubinstein blamed the revenue disappointment on slower-than-expected sales, which have led carrier partners to put new orders on hold. Additionally, he said employees should be "laser-focused" on driving sales and that several initiatives to increase sales and public awareness were under way.
"We initiated project JumpStart nearly three weeks ago. Since then, nearly 200 Palm brand ambassadors, supplemented by Palm employees from Sunnyvale, [Calif.,] have been training Verizon sales reps across the U.S. on our products," Rubinstein said in the memo, according to the Wall Street Journal.
"Early results from the stores have already shown improvement on product knowledge and sales week over week," Rubinstein continued. He added that employees should expect to get an eyeful of Palm in the future, as new advertisements were headed for billboards, bus shelters, buses and subway stations.
These efforts, Rubinstein explained, are ways Palm has been working to "accelerate adoption and grow distribution of WebOS."
That Palm needed a new strategy likely didn't come as a surprise to anyone. The Palm Pre Plus and Pixi Plus have been selling modestly since arriving on the Verizon Wireless network in January, and on Feb. 23, Palm's stock prices began falling to their lowest levels since March 2009.
Still, Palm's future hardly seems bleak.
"The fact is, they have cash, they have real revenues in the hundreds of millions and they're selling a fair number of phones," Roger Kay, an analyst with Endpoint Technologies, told eWEEK. "The scale of the phone market is really big. But by most other measures, [Palm's numbers are] pretty good."
Kay said it's important to view Palm's situation within the context of the present phone market, which lately includes incredible buzz about Google's Android OS, as well as Microsoft's announcementof its Windows Phone 7 Series.
In a February report, research company In-Stat described the growth of mobile operating systems as a trend that the market can't sustain.
"There is this issue of buzz, and in this market you don't want to lose the buzz," Kay said. "You don't want people to say, 'That was interesting, but we're on to other stuff.' There's a marketing expenditure that Palm's going to have to maintain to remain relevant."
Kay added that the flaw wasn't in the Palm product, and he found the Pre and WebOS to be strong. Instead, the issue is more a matter of balancing the right ecosystem, the right OS, the best distribution and developers, and, of course, being the subject of buzz.
"Over the next few quarters there will be a trend established, and it'll either be positive or negative. If Palm continues to grow, even at a slow rate, they'll be a viable platform," Kay said. "If the buzz is good, people will eventually come around."
Rubinstein concluded his memo by assuring his team, "Our goals are taking longer than expected to achieve, but I am still confident that our talented team has what it takes to get the job done."
He signed off: "Go team!!!"