Palm’s Survival Doubtful Going Forward
Analysts at Morgan Joseph downgrade Palm Inc (NASDAQ: PALM) from “hold” to "sell." The target price for PALM is set to $0.
PALM has posted lower-than-expected results for FQ3 10. Moreover, Palm has forecasted its revenues for F4Q10 at less than $150 million, as sell-through rates at carrier customers was weak in F3Q10. Morgan Joseph expects PALM’s margins to continue to be adversely affected in F4Q10.
Morgan Joseph expresses its concerns regarding Palm’s ability to survive going forward and the analysts are “skeptical that Palm's efforts at training Verizon representatives are going to have a meaningful impact on consumer demand; 2) Despite Palm's efforts at conserving cash, we estimate that it may only have sufficient cash to operate through mid-CY2011 given expected cash burn and net losses; and 3) As previously mentioned (see note on March 9), we do not anticipate a strategic buyer approaching Palm.”
