Palm Incorporated (NASDAQ: PALM)

Palm Incorporated (PALM) develops, manufactures and markets mobile products to individuals and business worldwide. The Company’s products include Palm Pre, Treo, Centro and, now, Pizi smartphones, which provide multiple productivity tools and entertainment applications. It also provides an operating system called Palm Web OS, which includes software updates, back-up and storage of data as well as an applications catalog. Founded in 1992, the Company is headquartered in Sunnyvale, California.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com, SEC Filings.

Analyst Consensus

The mean of 25 analysts polled by Thomson Reuters rate shares of PALM a “Hold.”

Analyst Recommendations and Revisions

Source: Reuters.com, SEC Filings.

Investment Highlights

The Company has focused on four strategic goals this year, including designing Palm Web OS products; offering Palm Web OS as a development platform; marketing the Palm brand to connect with other Palm products; and executing the strategy. The Company believes that if management executes these strategies well, it will grow its brand and subsequent products along more carriers and markets.

In the latest reporting quarter ended August 31, the Company introduced Palm Web OS operating system; activated a new cloud services infrastructure; and launched the Palm Pre. Management said in a September conference call that more products are in the pipeline along the lines of its Web OS devices.

During the latest quarter, the Company announced the $99 Palm Pixie, the follow-up product of the Web OC devices. Sprint, the Company’s carrier, offered the Palm Pre for $149.99 (after rebates) in late September. Palm Pre was also launched in Canada through Bell Mobility, and works with Telefonica in Europe to pre-market the Pre in the fall of 2009.

Following its first-quarter earnings report for the period ended August 31, management said in a conference call that it expects revenue for the second quarter to total less than revenue posted for the first quarter. Second-quarter revenue is anticipated to reach between $240 million and $270 million, and subsequent quarters should be stronger as the Company launches products with additional carriers later in 2009 and 2010. Revenue for fiscal 2010 is anticipated to reach between $1.6 million and $1.8 million, using cash during this time, but the Company expects revenue to bring it back to cash flow and earnings positive.

Latest Company News:

On October 28, rating agency Standard & Poor’s (S&P) raised its credit rating for the Company’s senior debt issue to ‘CCC’ from ‘CCC-’, and removed the Company from the S&P CreditWatch, citing the Company’s success of its new product line and ability to regain a positive cash flow as a niche supplier.

On November 13, rumors circulated widely that the Company may be bought by Nokia Corporation (NYSE: NOK), but an undisclosed industry analyst told The Wall Street Journal that a takeover of the Company by NOK is unlikely due to Nokia’s recent launch of N900, which competes with the Company’s Pre and Pixi.

The Company’s is set to launch the Pixi, a smaller version of the Pre on November 15, and will sell for $99.

Option strategist Fredric Ruggy of WhatsTrading.com told Reuters that call volume surged approximately nine times its average volume to more than 80,000 contracts during the afternoon as the rumor picked up speed that the Company is in the cross-hairs as a Nokia takeover candidate.

Technical Analysis

PALM trades above its 13-day moving average. This bullish sign is less significant because the 13-day moving average is sloped downwardly.

The MACD for PALM currently indicates a bullish signal. The MACD is above the signal line, a 9-day moving average of the MACD. The MACD is below the critical level of 0, which implies the past price action had been positive. Overall, the chart is neutral, but short-term technicals are bullish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.