I hate to use this cliche, but it has certainly been a roller coaster ride for Palm’s stock throughout the last 15 months. Unfortunately, a happy ending doesn’t seem to be in the offing for shareholders.
Palm traded as low as $1.30 in December 2008, with few bright spots on the horizon. But the stock started spiking when word circulated it was coming out with a killer smartphone and operating system that would resurrect the company.
Palm ultimately released the Pre and Pixi smartphones, compatible with its webOS operating system, that had reviewers gushing and market watchers predicting huge success. The stock went gangbusters, trading as high as $18.09 in September. For all you mathematicians, that’s a 1,291% gain over a nine-month stretch.
Too much too fast? You better believe it.
Palm’s famed bet on Pre and Pixi hasn’t lived up to expectations, with Palm failing to gain significant traction against Apple’s (AAPL) iPhone, Google’s (GOOG) Android-powered phones and BlackBerry smartphones. The stock has cliff-dived as a result.
From Dow Jones’ Shara Tibken:
The latest forecast and smart-phone sales data from Palm Inc. (PALM) raised serious concerns Friday about the company’s viability, helping send shares to new 52-week lows.
Everyone knew the smart-phone maker’s fiscal third quarter was going to be rough after the company preannounced results last month, but its final results–with a warning of significantly lower revenue in the current quarter on disappointing sales of its latest smart phone–raised further questions about the company’s future.
“The death spiral is accelerating,” Morgan Joseph analyst Ilya Grozovsky said in cutting his rating on the stock to sell and saying he’s doubtful about Palm’s survival.
He also slashed his price target to $0, as did Canaccord Adams analyst Peter Misek.
Palm shares were recently down 19% at $4.56, dropping below $5 for the first time since early 2009. Shares have lost 75% of their value since peaking six months ago.
The future isn’t exactly bright. Palm warned of significantly lower revenue in the current quarter as its flagship devices aren’t selling as well as previously hoped. CEO Jon Rubinstein described the company’s performance as “extremely disappointing to me personally.”
And investors hoping for an acquisition sooner rather than later may need to hold their breath.
“There’s all kinds of speculation out there that we are going to get bought, that we are not going to get bought,” Rubinstein said on the conference call, noting the board would consider any “reasonable proposal.” He added: “Our focus since the day I arrived here, and that’s almost three years ago now, is to build a great company with a great mobile platform and great products. And that has been our focus.”
Analyst commentary this morning is “viciously negative,” Digital Daily blogger John Paczkowski says. “The headlines: Palm’s brand value has collapsed; its financial performance is a disaster; and its execution missteps in a business as competitive as the mobile market have left its future prospects dubious,” he writes. “If it’s true that bad news begets more bad news, Palm is in for a very rough time of it in the months ahead.”
Only two of 29 Wall Street analysts who cover Palm rate the company a buy. And Needham analyst Charlie Wolf said “were it not for the elegance of webOS and its potential, we would downgrade the stock to an underperform rating.”
Here’s the kicker: Palm’s 4Q is “bound to be bloody,” Wold adds.