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Palm Shares Rise 6 Percent

Mon Feb 4, 2008 - 1:47 PM EST - By Jennifer Chappell


According to Forbes.com, shares of Palm Inc. climbed Monday morning after Paul Coster, a JPMorgan analyst upgraded the stock, saying that sales of the Palm Centro might be better than expected. Sweet!

The stock had been rated as "Underweight" or "Sell", but Coster raised his rating on the stock to "Overweight" or "Buy". From the Forbes article:

Coster said sales of smart phones will more than double by 2011, and if Palm launches successful products over the next six to 12 months, its growth could be very strong.

Reuters is also reporting on the upgraded Palm stock. The stock rose 6 percent Monday after Paul Coster upgraded the stock.

Reuters quoted Coster:

"Our channel checks indicate that Centro sales may be exceeding expectations," Coster said in a note to clients. "The JPM Asia team indicates that Palm production schedules at (contract) manufacturers in Taiwan may top our unit shipment forecasts in the next 6 months. Our sensitivity analysis suggests there's upside to earnings per share."

According to Reuters, Palm shares were up 36 cents to $6.38 in late morning trade on Nasdaq. Coster made the suggestion that investors buy Palm "at these levels with a 6 - 9 month investment time-horizon" but said that Palm has to execute well. He went on to say that Palm could grow in the market for smartphones if they do execute well.

"In doing this 180 degree turn on the stock, we are putting a lot of faith in the technology and design competence of the new talent introduced to Palm, by Elevation Partners, because our confidence in the Palm heritage leadership team is otherwise at a low point," he said.

As Dieter mentioned in his recent article, the Centro might be coming to T-Mobile. Plus many are hoping to see the Centro coming to GSM in the near future. As well as the Centro is doing at the moment, it seems likely that Palm smartphone sells will boom pretty soon if the previously mentioned rumors pan out. The new pink Centro sure can't hurt sells either. I think this will be a very popular color and will be in high demand.

Recently Palm's Blog posted an article to help clear up the misconception on Palm's stock price. In the article, Paul Loeffler, Palm's VP of Public Relations, explained that Palm's current price of their common stock is roughly the same value as it was a year ago ($13.84 as of January 30th, 2007) if you add back the $9.00 per share to the current price of the common stock.

Under the terms of our recapitalization transaction with Elevation Partners, Palm paid a cash distribution to shareholders of $9.00 per share, funded by Elevation's investment of $325 million, new debt and a portion of existing cash. With this cash distribution paid out to Palm's shareholders (as of October 24th, 2007), the Palm stock price naturally decreased by the amount of the cash distribution.

Dieter also mentioned the stock price misconception in the latest TreoCentral TreoCast.

So, today's news about Palm's shares climbing was a bit of cheery goodness. Palm has needed some good news and I'm happy to hear about the rising shares. I have a strong feeling that Palm will be able to "execute well" in the coming months. With the Centro selling strong, and the upcoming WM Treos, especially the Treo 800w, and the new Nova OS on the horizon, Palm should do well. I know that the waiting for the new OS will be hard for all us Palm fans, but I really believe that Nova is going to be worth the wait. Besides, an OS can't be put together overnight, and we all want it to be solid, dependable, and mind blowing when it comes out.

No company is perfect, and I think that Palm has learned a lot from their recent rough spots. It seems that Palm has all their ducks in a row now, and I believe they're going to move forward, full steam ahead.

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