Investors appear to think that yesterday's news that Palm is dumping its ties with the ad agency responsible for the creepy Pre commercials, means that Palm is headed towards good times. The stock closed at $3.85, opened at $3.90, and had gotten as high as $4.33.
Investors are idiots.
If (good) advertising were all that was required to make a product succeed in the market place, then the Android G1 should have bombed from a lack of advertising, being the very first Android phone released; yet the G1 surely didn't suffer the fate of the Pre, whose sales lagged behind that of the G1.
While it's true that better advertising could have helped Palm's situation, it takes much more than advertising to make a product succeed; people have to believe in the company behind it, they have to find a compelling reason to buy it, and they have to like the product. To that last bit, all you need to know about the Pre, is that it fares poorly in the opinion of owners at Sprint, with an average rating of 3.8 out of 5 stars. Compare that to the HTC Hero (running Android) at Sprint, which is rated 4.5 out of 5 stars. If owners of the Pre aren't overwhelmingly happy with their phones, I tell you now, investors who think advertising will solve Palm's problems are idiots who only make their money out of pure luck.
On a separate note: The head economist at the OECD has indicated that stimulus spending should be winding down as spending cuts and raising taxes should follow. Of course, in the US, if we get a second Republican revolution, we could end up with spending increases and tax cuts, which would invariably exacerbate the soon-to-be-infamous debt-to-GDP ratio that Republicans have been talking about, lately.
I am surely going spend extra time in Purgatory for questioning the intelligence of Conservatives (which we all know, is at best marginal.)
EDIT-4/7/2010 17:13 PDT
Turns out, Palm shot up over 80 points including overnight trading, because of ramped up takeover rumors. You know what's funny about the takeover rumor? It fits perfectly with what I wrote might happen, 15 days ago: "I can visualize a Taiwanese or PRC company buying out Palm - at a loss to Elevation of course - and getting rid of much of the current staff, turning it private." Crazy, I know...how prescient, when other people were talking about RIM, DELL and other technology companies.
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