Smartphone maker Palm shares plunge on disappointing sales
Shares in handheld computer maker Palm plunged Friday after the company reported another quarterly loss and gave disappointing guidance. Speculation mounted that the company could soon be an acquisition target.
AFP - Palm shares plunged Friday after the struggling US mobile device maker posted more disappointing results and speculation mounted that it could be an acquisition target.
Shares in the Sunnyvale, California-based company were trading 18.94 percent lower at mid-day at 4.58 dollars.
Bank of America analysts painted a gloomy future Friday for the handset maker, which has been unable to make a significant dent in the grip on the smartphone market of Apple and Research in Motion, maker of the Blackberry.
"We see no quick fix to the challenges as competitive risks are intensifying and Palm's response appears insufficient," the Bank of America analysts said.
While an acquisition of Palm "is an option, it is too speculative as the rationale to own the stock," they wrote.
"In our view, Palm has at best two to three quarters to turn things around before it may need to consider more extreme options," they added.
Palm chairman and chief executive Jon Rubinstein declined Thursday to comment on speculation the company may be an acquisition target.
"If there's a reasonable proposal the board has to consider it," he said. "But for the three years I've been here our focus has been to build a great company with a great mobile platform and great products."
Palm reported a third-quarter net loss of 22 million dollars on Thursday and said that although it shipped 960,000 smartphones during the third quarter only 408,000 were actually bought by consumers.
Palm's fourth-quarter revenue forecast of less than 150 million dollars was well below the 350 million dollars expected by Wall Street analysts.
Palm came out with some of the first personal digital assistants in the 1990s, but in recent years it has been lagging behind rivals Nokia, Apple and RIM.