Forbes has an article today entitled, “PalmOne Stock Retreats on Weak Forecast”. I’m not going to link to it because it ain’t worth your time. Suffice to say that after PalmOne’s recent earnings call, their stock price went down.
Why, is the company in trouble? If they are, we should all be in such trouble. PalmOne reported their fourth profitable quarter in a row, with massive and better than predicted (key point for later) sales in their Treo and Tungsten lines. They’re just raking in money.
So where’s the problem? Given the stock of unsold Treo 600s, they projected weaker, yet still profitable, sales in this quarter.
Get that? Still profitable, but not as much since they’ll take a hit by selling some of those 600s below cost. But they’ll still make money. But wait! This is just a projection of future sales. You know what we called that when I was in retail? Bull$hit. Every morning our managers would say something like, “We want to do $20,000 of business today,” and I’d think, “Well that’s nice, but you have no idea who’s walking in that door.” Sales projections are among the most meaningless of meaningless statistics. PalmOne’s current earnings call proves the point, because they overshot the last projection. If they keep up that trend and do it again (some analysts thought the Treo 600 thing would hurt them last quarter), then they’ll be where they should be and there’s no reason to drop the stock.
Wall Street is a consensual hallucination and the sooner we base our economy on something more real, like reading chicken entrails, the better off we’ll be. Now, if you’ll excuse me, I have to buy some PalmOne stock while it’s such a good deal.
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