Shares of Palm Inc
Palm shares closed down 6.5 percent after falling as much as 11.8 percent earlier in the session, two days after it kicked off sales of Pre to small crowds at many of the stores operated by Sprint Nextel
Sprint said the device had record sales for a first weekend of a phone launch and that it was restocking Pre as fast as Palm can make them after selling out in many locations.
But CL King and Assoc. analyst Lawrence Harris said shipments appeared to be far less than he had the expected, and that shoppers who missed their chance may have to wait a while.
We now estimate that Palm shipped 50,000 Pre units in May, compared with our prior estimate of 100,000, he said in a note to clients. Our experience suggests that ramping up production of the Pre could take some time.
Harris changed his outlook for Palm's fiscal year 2010 loss to 75 cents a share 70 cents a share.
At around 50,000 units, first weekend sales would be also less than the 146,000 for the 2007 launch of the first generation Apple iPhone, analysts added.
Seen as a pivotal device for both Palm and Sprint, Pre sales started just before a developers conference today, where Apple announced a new iPhone at lower prices.
Looking beyond the early sales figures, FBR Capital Markets analyst David Dixon said the Pre introduction could spark financial improvement at Palm.
We expect (Palm's) share of gross industry post pay additions...to be further enhanced by the combination of expected Palm Pre success, enhancements to the company's product line-up in second-half 2009...and the conversion of a higher-than-expected level of Palm users in the customer base, which we believe is in the 2-3 million range, he said.
Palm shares closed down 84 cents at $12.16 on Nasdaq.
(Reporting by Franklin Paul and Sinead Carew)