New 'Low-Cost' Treo

In a conference call to investors yesterday, Palm CEO Ed Colligan dropped several references to an upcoming Treo that will be less expensive than current Treos. It's also apparently coming very soon, he stated:

• "We will address the retail environment further with the introduction of a lower-priced product targeted at retail demographic in the very near future."
• "We're collaborating with a new China-based ODM, or Outsourced Design Partner, that is helping us lower cost to end-user customer. You'll hear more from us about this product in the coming weeks."
• "We expect to see if offered by more than 20 carrier partners worldwide by the end of our fiscal year."

Tough First Quarter

In their press statement, Palm announced that their profit for its fiscal first quarter of 2007 fell slightly to $16.5 million (or $0.16 per share) on a slight increase in revenue, $355.8 million. CEO Ed Colligan named two reasons for the slip: new accounting for stock option expenses and poor retails sales on Treos.

As previously reported, Palm had already adjusted its earnings expectations down. Palm sold 569,000 Treo units, up 21% year over year despite very heavy competition. This number was still lower-than-expected, however, due not to business to business sales but to competition in the retail space. Colligan emphasized in his conference call that business usually do a more thorough analysis of their needs from a smartphone than retail customers who "are more easily influenced by price, fashion, or aggressive marketing."

The lion's share of Palm's profits came from Treos, revenue on handhelds was only $87 million. Colligan emphasized Treos much more than handhelds during the conference call. Palm also announced yesterday that they'll be repurchasing back up to $250 million of their own stock.

Edit 2: I'd be remiss if I didn't provide a few more links: A PDF of the slides for the main talking points of the conference call, The online audio stream of the conference call (registration required), heck -- there's even a PDF of Ed Colligan's script for the initial part of the call.

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