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Home Markets Markets Kaufman cuts rating on Palm Inc
Kaufman cuts rating on Palm Inc PDF Print E-mail
Written by Will Peters   
Friday, 19 March 2010 12:02
Worries over Palms inability to crack smart phone market. Apple Inc gets an upgade.



Palm Inc (NASDAQ:PALM) has received a sober appraisal from analysts at Kaufman Brothers.

"We are less confident in the company's prospects as an ongoing concern," Kaufman Bros. analyst Shaw Wu told investors in a note Friday. Wu cut his rating on Palm's stock to "Sell" from "Hold."

He said Palm will either have to sell itself off or raise more capital to avoid running out of money.

Yesterday Palm Inc had strong day on Wall Street, shares closed 5.21% higher at 5.65.

However, in pre-market trade shares slid 15 percent, or 87 cents, to $4.78.

Ratings on Apple Inc


Wu also reiterated a "Buy" rating on Apple Inc (NASDAQ:AAPL) and Research in Motion Ltd, whose iPhones and BlackBerrys blocked Palm in its efforts to reclaim market share.

Palm said Thursday it shipped 960,000 smart phones in the quarter ended Feb. 26, but customers only bought 408,000, down 29 percent from the quarter before. Apple sold 8.7 million iPhones in the latest quarter.

In a client note, Deutsche Bank's Jonathan Goldberg cautioned against "getting overly negative," keeping his "Hold" rating on the stock.

"If the company can meaningfully reduce its cash burn, they may be able to eke along in survival mode long enough to improve their trajectory," he said.

But Goldberg also warned that bad news could beget more bad news. "A poor showing at Sprint and Verizon, has doused interest from other carriers including AT&T and Vodafone," he said.

More carriers generally means more potential customers, which Palm desperately needs. The company said Thursday it expects revenue of $150 million this quarter, about half what analysts polled by Thomson Reuters were looking for. The shortfall comes in part because carriers have already built up inventories of its Pre and Pixi smart phones that they still have to sell.
Last Updated ( Friday, 19 March 2010 12:03 )