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WebOS gets Flash and video, but Palm's Q3 financials tank

Ripe for a buyout?

WebOS gets Flash and video, but Palm's Q3 financials tank
One of the few criticisms made about the Palm Pre has been its lack of video support.

While Android and iPhone users have been able to record video for some time, Palm's most important hardware release for years launched without what many consider a basic function.

However, with the release of the over-the-air webOS 1.4 update, both Pre and Pixi owners should now be able to record video on their phones.

The update also comes with the usual array of bug fixes and Flash support on the Pre, giving Palm the upper hand over Apple in at least one area.

Problematic Palm

Yet the update appears on the scene as the company enters a sticky patch.

Though the launch of the Pre was intended to revitalise Palm's output, the firm has this week lowered its revenue expectations for both the current financial quarter and the full year.

"Revenues for the quarter and full year are being impacted by slower than expected consumer adoption of the company’s products that has resulted in lower than expected order volumes from carriers and the deferral of orders to future periods," the company said in a statement.

"Accordingly, Palm expects fiscal year 2010 revenues to be well below its previously forecasted range of $1.6 billion to $1.8 billion."

Palm believes its third quarter revenues will fall somewhere between $285 million to $310 million on a GAAP basis.

More details are expected during a scheduled conference call on March 18th, but the Pre's reportedly sluggish take up has reignited speculation that Palm may be looking for a buyer.

Ripe for sale

"The best candidates to buy Palm might be a Chinese or Japanese company wanting to get in the smartphone market, but realistically what would they buy?" J Gold Associates analyst Jack Gold asked PC Advisor.

"The odds Palm can last another year are no better than 50-50 right now, unless it builds momentum and makes money."

Nokia is also being touted as a potential buyer by some commentators. The Finnish giant itself is experiencing troubled times – albeit to a lesser degree – within the smartphone market.

Jon writes a Dear John

Palm is keen to ensure it doesn't get marked as a dead duck, with CEO Jon Rubinstein rallying the troops in an open letter to the company's workforce.

"I realise this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March," Rubinstein said.

"In the meantime, the entire executive team has been working extremely hard to improve product performance, and have implemented a number of initiatives to increase awareness and drive sales."

It's Rubinstein's belief that momentum behind the Pre is now building in the US, though he did suggest its launch hadn't lived up to its hype, carriers shouldering the blame.

"Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales."

Despite such a dour forecast, Palm does have investments to fall back on, the company revealing it expects to close its third fiscal quarter with a cash and liquid investments balance in excess of $500 million.

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

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