You know that a company is not in a great place when the best you can say about it is that it sees its own failures.

That was the general takeaway on Palm Inc.'s announcement on Tuesday to cancel its much-hyped but widely-panned Foleo mobile computing product before shipping it to customers. True, it was better that the company cut its losses now than spend months or years trying to sell the public on a flawed product. But it's hard to overstate the predicament of the company that can't seem to compete anymore in the very mobile industry it created.

This scathing commentary from News.com called the move "mortifying ... an embarrassing admission that Palm's vision of the computing world is way off base from the rest of the world," and equated the development to Apple canceling the iPhone in April.

"Palm better think long and hard before the next time it tells people it's about to change the world of mobile computing," writes Tim Krazit on News.com. "The company is in danger of watching a category it helped create leave it in the dust."

Of course, it's easy to kick companies when they're down, but much harder to assess their comeback potential. While some observers seemed encouraged by the failure of Palm's stock to fall much on the announcement (it briefly rose but then retreated), that lack of significant stock activity is probably more a sign of apathy than optimism. In Palm's favor there is leadership that is — if not the best at identifying winning designs — at least swift in seeing its error, as well as a recent private equity deal that installed some new design-savvy management.

Still, there's no way you can put an optimistic spin on this latest devastating failure. Investors are looking pretty apathetic. —Andrea Orr   

See Palm's Foleo announcement
See News.com story
See June 4 story on TheDeal.com