For the seventh consecutive quarter, Palm reported a loss. The third quarter of 2009 saw the company report $95 million of red ink which works out to 89 cents a share, up from a loss of $54.7 million dollars or 53 cents a year earlier. Part of the problem is that buying of Palm products has dried up in anticipation of the launch of the Palm Pre. Since the smartphone was introduced at the CES in January, it has garnered the largest pre-release buzz for a cellphone since the original iPhone. As a result, customers have been waiting for the device to hit the stores and have slowed down their purchases of Palm devices dramatically despite the introduction and release of the Palm Treo Pro, a Windows Mobile smartphone loaded with features and with pretty design. The quarter might have been better if not for the saga of the Treo Pro. The handset was expected to hit Sprint stores in late January, and then by mid February in time to have some impact on the quarter. But delays kept pushing back the release of the phone and by the end of the period, only Canadian carrier Bell had released the device in North America. The Pre is considered the last chance for Palm to become relevant again after nearly disappearing from the cellular scene. Earlier this month, we reported how the carrier was able to raise cash and pay off a debt to Elevation Partners by exercising an option to sell 18.5 million of their shares held by Elevation for $105 million dollars. After repaying $49 in debt to Roger McNamee’s firm, the balance went to Palm to improve liquidity. After all, marketing a high profile device like the Pre is going to take plenty of money. And Palm isn’t the only firm with much on the line here. Networker Sprint is supposed to have the exclusive U.S. rights to sell the Pre for the rest of the year. Will Palm continue to post losses every quarter, or will the Pre help the company post black ink? We’re not sure what the record for consecutive losing quarters is, but we are sure that is not a record that Palm wants to own.

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Only the strong shall survive in this gloomy economy and it looks like Palm is going to do everything it can to stay afloat until the release of the Pre and the webOS system. Companies cannot continue their operating efforts without a solid flow of capital to sustain the business. In an attempt to gain more capital before it comes out, Palm is exercising its right to remarket shares held by private equity firm Elevation Partners. It looks like 18.5 million shares of its common stock, worth $105 million, will be remarketed to help pay off $49 million they owe Elevation Partners. Once that is taken care of, any net proceeds will go directly to strengthen Palm’s capital position for the inevitable launch of the Pre. It’s do or die now for the pioneering company, but we are sure that the new operating system and phones will bring them back to the top. 

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Palm announced its preliminary results about the Q3 of fiscal year 2009, resulting in $85-90 mln revenues and $95-110 mln of used cash, or $5-25 mln loss. The reasons – the old Palm OS, the late launch of the Treo Pro and the global economy problems.  However,  Palm is still expected to have $215-220 mln, which should be enough to keep the company until the webOS based Pre launches “during the first half of the calendar year” and bring huge revenues. I’ll have my fingers crossed for you, Palm!

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