Palm CEO talks about disappointing sales

Poor Jon Rubinstein. After a strong, early push, Palm’s sales have slowed and revenue has dried up with $300-$320 million in Q3. Their “guidance” to Wall Street AKA how much they expected to make? $1.6-1.8 billion. Bloops.

The letter is over at WSJ but here’s an excerpt.

This morning we announced preliminary results for our 2010 third quarter. Since the quarter has not yet closed, it is too soon to offer exact numbers, but we stated that we expect to report revenues for Q3 between $300 and $320 million. We also announced that we expect our revenue for this fiscal year to fall below the guidance we gave to Wall Street, which ranged from $1.6 to $1.8 billion. As we mentioned in our press release, our softer than expected performance is due to slower than expected customer adoption of our products, which in turn has prompted our U.S. carrier partners to put additional orders on hold for the time being. On a positive note, we expect to exit the quarter with over $500 million in cash on our balance sheet. We’re scheduled to announce our full financial results in March.

I realize this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March. In the meantime, the entire executive team has been working extremely hard to improve product performance, and have implemented a number of initiatives to increase awareness and drive sales.

Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales. To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations—all getting the word out about Palm.

What’s holding things up? Three things: Android, Android, and Android. Palm used to be the alternative to monolithic mobile phone manufacturers like RIM and Microsoft. With the iPhone grabbing the hipster market and Android grabbing the nerds – and RIM still runs the business roost – Palm has no home in this world anymore.

My prediction? The next company to face these problems is, in fact, RIM. If Windows Mobile 7 figures things out, they’ll have both the casual and business markets buttoned up. Smartphones can now do everything RIM does and better.