PALM Cuts Revenue Guidance; HP Bid Reflects 23% Premium

Analysts at JP Morgan maintain their "neutral" rating on Palm Inc (NASDAQ: PALM).

Palm’s revenue guidance of between $90m and $100m indicates that the company would soon need to raise cash. PALM's products do not seem to be gaining traction in key channels. Against this backdrop, Hewlett-Packard’s (NYSE: HP) purchase offer of $5.70 per share “implies a 23% premium to yesterday's close and stands as a final positive testament to the WebOS platform that Palm created,” the analysts say.

JP Morgan has reduced its EBIT loss estimate for F2011 to May by $402m to reflect a decline in revenues and an increase in costs while HP invests.

More Analyst Ratings here.