“Palm is essentially an accelerating death spiral.”

That’s not a good thing to hear, and given yesterday’s bleak financial report, we can’t say we disagree (though we do maintain that it is possible to pull out of a death spiral). That little nugget comes from Ilya Grozovsky, analyst at Morgan Joseph & Co. As CNN Money noted, Grozovsky was one of two analysts to cut their price targets on Palm stock to a heart-stopping $0/share. By valuing the stock at zero, Grozovsky and Peter Misek of Canaccord Adams are declaring that Palm the company is worth nothing.

Those two doomsayers aren’t the only ones kicking Palm to the curb. At this point, not a single analyst will recommend buying Palm stock. Given Palm’s current cash burn rate, most estimate that Palm has only about twelve months to execute a turnaround or find a suitor with deep pockets.

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We just mentioned that Best Buy is still struggling with the Palm Pre backlog and no surprise, Sprint has the same issues.  So says Sprint Chief Financial Officer Bob Brust:

We still have a backlog of subscribers but it’s not unmanageable and we get shipments every week," said Sprint CFO Bob Brust during a Webcast of an investor conference, adding that the shipments are increasing every week.

"We’ll be short for a while but we’re catching up," said Brust, who sees the phone attracting new customers as well as existing Sprint customers, potentially reducing its subscriber cancellation rate.

The ‘good news’ is that demand is still outstripping supply enough that Sprint claims they haven’t felt any hurt from the iPhone 3GS.  Whether that will continue to be the case once the Pre is fully stocked across all channels is another matter, but the fact that Sprint said they didn’t see a dip in demand is actually pretty darn impressive given that Apple has already sold over a million iPhone 3GSes.¹

Plus, we’re not complaining about the "shipments every week" part, we just hope that they’re significant. Are you still trying to track down a Pre? Any luck?

[via PalmInfoCenter]

1. And you thought "Pre" was difficult to pluralize.

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Woody tips us off to this Bloomberg article, wherein they polled a half dozen analysts and asked them what they figured the inventory of the Pre at launch would look like.  The median answer: 375,000.  We’d already heard from an insider that stock might be so thin that Sprint Employees have been told they will need to wait a couple months in order to get one for themselves.

Bloomberg speculates that we could be looking at a sellout situation, suggesting that Palm is intentionally keeping the stockpile low to "enhance its allure."  Maybe they’re right, but we’re thinking Palm is more likely to want to sell as many of these as humanly possible as quickly as possible.

Here’s the question, then: how many Palm Pre phones do you think Sprint and Palm will sell in, say, the first month?

Thanks, woody!

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