Sunday, September 1, 2002

The morbid fascination that is Palm, Inc.


By David Gewirtz

I am morbidly fascinated by Apple. Every so often, I have to go to the Apple site and check out what they're up to. I used to be an Apple user on a daily basis, and I still, to this day, look at their hardware and go, "Oooh, pretty."

Unfortunately, I can't ever come up with a good reason to buy an Apple product. You know all the arguments. PCs are cheaper, Apple is prettier, but the bottom line is that, other than just the "wanna" factor, I can't see any reason to buy Apple.

I do have to admit that sometimes they get close. Like the iPod, their hot little hard disk-based MP3 player. If that sucker had come out for both Windows and Mac at the same time, I would have snapped one up. But in the intervening seven or so months since it came out for just the Mac (hubris? stupidity?), a bunch of other MP3 solutions flew my way. The same is true of the wacky new iMac. I mean, it's kinda cool. but it uses a laptop hard drive and is a bitch to upgrade. It's easier, and way cheaper, to build a much more powerful PC.

Similarly, I'm becoming morbidly fascinated by Palm. Obviously, as the editor-in-chief of PalmPower, I'm a pretty heavy proponent of Palm handhelds and Palm OS devices. But I have to admit that I wonder just how many people inside Palm are paying attention.

As of September 3, the day we put this issue of PalmPower to bed, Palm's stock closed at $0.69. Late in July, Palm got knocked of the Standard & Poors index, something that didn't exactly inspire confidence in those stockholders holding stocks worth less than a penny on the dollar of their original post-IPO investment.

Palm is now at exactly 18 days into their 30-day delisting watch and is pretty much officially a penny stock. One of the criteria NASDAQ uses to kick stocks off the exchange is 30 days under a buck a share. To be fair, there are other conditions that also must be met to merit getting bumped, including overall lack of capitalization, and there is an appeals process. As a result, although Palm's been under a buck for 18 days, I don't necessarily expect them to lose their spot on the market anytime soon.

The fact is, though, that Palm is a company that makes real, physical products. A baby of the Internet stock boom, it's not like those Internet companies with no products and no profits. However, Palm went public at close to $100/share and it's now selling for under a dollar. Hopefully, no widows nor orphans bought into this stock! The company never should have gone public at that price value, as so many other companies learned. It was greedy and the market corrected. Today's market value for Palm is about half-a-billion dollars, which is probably about right.

The morbid fascination continues.