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Six Things to Ponder About Palm


What could push profits up and what will happen if they stay down.

Toward the middle of 2009 shares of Palm (PALM) were kind of red, and some might argue white hot. But a simple gander at a chart shows that its popularity has since waned, sort of like '70s shag carpeting or metal-wheeled roller skates. Okay, maybe not quite, but the stock has gotten pummeled and is sitting under $6 a share.

Now what? Here's what's swirling around in my noggin prior to its third-quarter numbers, which are due out on Thursday.

1. Estimates for Palm have been coming down pretty steadily, and Palm is expected to lose $1.27 this year. That certainly doesn't have me breaking out the fancy stationary to pen a letter to dear old grandma. I'm going to need some clues (or info from my Magic Eight Ball) about when profits may be in the cards before I get more enthused.

2. Regarding the third quarter, analysts are expecting a loss of $0.42. Me? I wish I had a feel but I'm not sure where the number will finally come in. I'll be more tuned in to what management might (or might not) offer up about the operating environment and how its products are being received. In order for the shares to get a boost, I think it'll either need to blow away estimates or offer a seriously rosy outlook, and I don't think either is overly likely.

3. Its single-digit stock price is a tad of a worry. If it drops under a Lincoln ($5 a share), odds are that it will also drop off a host of radar screens, which could open the door to even lower prices. I'm not saying it's going to happen, but it could and so it's food for thought.

4. If and when there's a window, I sure would like to see management bellying up to this bar in the open market. I think if they did, the shares could get a little goose.

5. I realize that Palm doesn't have anywhere near the cheering section it had a few quarters back, but in a way I find that intriguing. Part of me thinks that most of the "damage" has already been done.

6. One thing that not too many folks are talking about these days is that with the stock in the proverbial tank, it could end up with a target slapped on its hind quarters and be an acquisition candidate. Nokia (NOK), waddya say?

Hey, have a great day!
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No positions in stocks mentioned.

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