Jordan Palm not a slam-dunk

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After selling only $3,844 in Michael Jordan-edition Palm devices during the third quarter, an Ann Arbor, Mich., company may be the first to have trouble marketing a product featuring the basketball superstar after his return to the National Basketball Association.

PTN Media reported the sales Nov. 19 in its third-quarter 10-Q report. PTN began selling the Michael Jordan-themed personal digital assistants in late June.

But declining demand for hand-held computers coupled with what sports marketing experts said has been a less-than-dominant return and a new attitude toward Jordan could spell disaster for PTN, which has lost $10.5 million since 1998. "Perhaps we've reached the limit of what Michael Jordan can sell, but it's never a sure thing when you have an athlete endorsing something that isn't directly related to sports," said Andrew Appleby, president-CEO of General Sports & Entertainment, a sports marketing company. Peter Klamka, PTN Media president-CEO, said he expects to sell 250,000 Jordan Palms by March 31. "We thought there was a void in the marketplace for something like this. Everything has been branded, from automobiles to apparel, but there's no branded electronic goods," he said. "We're very pleased from the results for an 11-month-old business. It's rare you get true pioneers in this day and age."

Mr. Jordan's name once meant huge financial gains for products he endorsed, said Nova Lanktree, president-CEO of Lanktree Sports Network, which negotiates deals between athletes and companies or organizations they endorse.

"Five years ago, you would have been guaranteed that paying for the licensing rights to Michael Jordan would have been money well spent," Ms. Lanktree said.

PTN signed a three-year deal with Jordan in January. Under terms of the contract, Jordan gets 12% of the revenue and is guaranteed $1 million this year and $1.25 million in the second and third years of the deal, Mr. Klamka said. In the deal, PTN purchases Palm devices from Palm, which customizes the software and casing of the hand-held computers. PTN's only involvement is the licensing and marketing of the Palms, Mr. Klamka said.

The Jordan edition features a black faceplate and cover with the Jordan logo, quotes and trivia related to Jordan, Jordan pinball, training tips, a shot chart and information about his restaurants.

There's an m100 model that retails for about $125 and an m500 version that goes for about $425. The hand-held computers are being sold where the Washington Wizards play, the MCI Center, along with NBA stores, Jordan restaurants, Modell's Sporting Goods, a Tower Records store in Washington and other department stores.

Also, the items are being pushed through the Web site for Fort Lauderdale, Fla.-based Sports Authority, www.sportsauthority.com; a sporting-goods site run by Sportsline.com at www.mvp.com; eastbay.com; and an Internet site run by PTN at jordan.palm.com.

Growth in the hand-held market has tapered from a sprinter's pace to a slow walk. Stephen Baker, director of research at market-research company NPD Group, said sales of hand-helds are up about 60% through September, with about 2.4 million units sold compared with about 1.5 million during the same period last year. The number sold in the third quarter this year was 660,000, a 7.5% jump from the second quarter. Mr. Baker said the research group had been seeing the number of hand-helds sold rise by as much as 100% monthly into the first quarter of this year.

Santa Clara, Calif.-based Palm announced last week that it plans to lay off 250 people, or 17% of its work force, and expects a loss this quarter. But Mr. Klamka insists PTN Media, which has 11 employees and has lost an average of $2 million annually, will be profitable in the first quarter of 2002 because of its branded hand-held computers, related software and accessories.

The company recently started selling Vince Lombardi theme software for Palms and plans to roll out a new hand-held computer featuring pop singer Christina Aguilera early next year.

Mr. Dietderich is a reporter at Crain's Detroit Business.

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