March 17, 2008, 10:58 am
Palm: Analysts See Centro Strength Eating Into Margins
Posted by Eric Savitz
Palm (PALM) shares are taking some heat this morning as analysts look ahead to the company’s announcement this Thursday of results for its fiscal third quarter ended in February.
One question the Street is focusing on: the impact on the company’s margins from strong demand for the $99 Palm Centro smartphone. There is some concern that the device is cannibalizing demand for the higher-margin Treo.
I could never be an equities analyst. Their thinking has its own logic. Because the Centro Phone is so good, they say, that's bad for Palm. People will buy Centros and not the more profitable Treos. Wrong. I've got a Centro and I never would have considered a Treo. Centro addresses a different client base. From Barron's: