Palm, considered a pioneer in the smartphone market, is in need of rejuvenation, and some analysts see the new Nova software as its best shot in years. Indeed, news that Palm was scheduling a press conference at the Consumer Electronics Show, where the Nova system was unveiled, jolted Palm shares, which spiked significantly in anticipation that the oft-delayed new software was finally on its way.
Some analysts, however, remain skeptical that the company will be able to turn things around.
"While the expected new Operating System launch at CES on Jan. 8 represents a glimmer of hope, we remain skeptical as we await more details given the company's lack of timely launches," wrote Jim Suva of Citigroup, who has a sell rating on the stock.
The new Nova operating system has been delayed several times. In the interim, Palm has had to make do with software underpinnings created in 2004, which is a very long time in the fast-moving technology market, and has watched its market dominance erode as it failed to keep up with Blackberry maker Research In Motion Ltd. (RIMM), Apple Inc. (AAPL) and its iPhone 3G.
Palm's also coming off a wider net loss in its fiscal second-quarter amid falling sales and margins. Its aging line-up of products has had a weaker consumer appeal.
For the quarter, Palm posted a net loss of $506 million, or $4.64 a share, from $8.65 million, or 9 cents a share a year earlier. Revenue dropped 45% to $ 191.6 million as smartphone sales fell 39%. Gross margin decreased to 19.9% from 29.7%.
Standard & Poor's earlier this month cut the credit rating on Palm two notches further into junk territory, citing weak sales and market-share losses.
