The surprising cause of Palm Inc’s increased warranty expenses

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We told you this was going to be fun. Following Paul Kedrosky’s lead we decided to do some of our dirty-word searching in the SEC filings. It turns out that Palm Inc had an unfortunate experience with its product mix, if its December 2, 2005 quarterly report is to be believed.
Find out what got into the Palm product line after the jump.


In the course of a discussion of revenues in the December 2, 2005 10-Q, the Palmsters note that:

Freight costs decreased by approximately 0.5 percentage points primarily due to a reduction in expedited shipments and freight cost recoveries from customers. Partially offsetting this decrease was an increase in warranty expenses of 1.6 percentage points due to a shit in our product mix towards smartphones. Smartphones carry higher warranty costs than handheld computing devices as a percentage of their respective revenues.

I guess they agree with the commenter on the Geek.Com forums who wrote:

The m100 is a piece of crap. It has a flimsy cover that keeps falling off. The first day out of the box, I noticed that problem... and was too optimistic to return the darn thing. Now, a year later I'm finding that there is software I would like to install on my palm, but with 2mb of memory, it is very limited. I contacted Palm Inc. to find out if they had any memory upgrade solutions, and they informed me that they do not offer upgrades on their OWN PRODUCT!! However.. they refrenced me to a website.. who will upgrade my palm m100 for the BLOWOUT price of $68.00!!! Good Grief!! The thing isn't even worth $68.00 bucks anymore!

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