They were more interested in Palm's assertion that TI chips would appear in Palm OS-based devices compatible with next generation (2.5G) phone technology by the end of calendar 2002.
Cut the trumpet flare. That date is a little later than Wall Street was hoping.
Palm dropped more than 8% to $3.17 after the midday announcement, as investors groaned anew, despite their keen familiarity with the feeling that Palm is pushing back dates. It seems the next generation of Palm's operating system may not be in sync with the Street's schedule.
"They've been talking about having Palm OS version 5.0 sometime in the second half of the year," explained Todd Kort of Gartner Dataquest. "I was hoping that would be early in the second half of the year, but this tends to indicate that it will be later.
In the fall, Palm defied investors' expectations of a device that could send and receive emails and pushed out the delivery date of its anticipated rival to the BlackBerry pager indefinitely. Analysts are expecting that device in the next two months, but investors are getting fidgety over delays in bringing out a device to work with the data-friendly 2.5G wireless technology mobile-phone companies are installing in the U.S.
"At first it was the end of this year. Then it was 'we meant the end of the fiscal year in June. Now it's 'We didn't mean the end of the fiscal year,' " says Tom Sepenzis of CIBC World Markets, who has no banking relationship with Palm. "Clearly, there's some pushing out here."
Industry watchers are expecting wireless connectivity to propel the PDA market out of the doldrums in 2002.
has been applauded widely for its upcoming Treo combination phone and organizer; the Treo will be available for GSM mobile phone networks this spring, ready to be upgraded for GPRS in the summertime. Handspring's stock shrugged off Palm's news, rising 1% to $6.28 in Monday trading.
At the very least, Palm's selection of Texas Instruments illustrated that the handheld maker is taking some steps forward on a more up-to-date operating system. Palm will tailor its OS to work with TI's processors based on technology from British firm
, a technology migration it announced back on July 24, with support from TI,
and former No. 1 chip ally
The handheld maker's move to the new technology will bring Palm-based handhelds better multimedia capability and will move the platform closer to always-on capabilities needed for new devices, as well as more up-to-date, 32-bit technology. Motorola is the loser in the deal, falling out of favor despite providing DragonBall processors for current Palm models.
"It's a little bit of a slam," agrees Sepenzis. Then again, Motorola management has openly discussed selling off its chip division if the company can't turn around its poor finances in the next year or so. The TI announcement also put Texas Instruments at the front of the list as the likely purchaser of a $50 million Palm convertible note on Dec. 7; however, Palm has stated it would not identify the investor.