S&P outlook on Palm turns sour | webOS Nation
 
 

S&P outlook on Palm turns sour 50

by Derek Kessler Wed, 03 Mar 2010 8:16 pm EST

Standard & Poor

The bad news for Palm keeps piling up, especially if you’re concerned about the whole financials thing. As noted by the Wall Street Journal, Standard & Poor’s Ratings Services has reversed their outlook on Palm, flipping from cautiously optimistic to downright negative. S&P’s ratings are a judgment on a corporation’s credit potential, and the occasionally issue outlooks statements on how they think that company may fair in coming months and years.

S&P’s current judgment of Palm is a CCC+ rating, the top tier of the low highly speculative territory. It was back in October that S&P upgraded Palm to a CCC+ rating and issued their positive outlook. But given recent revelations about Palm’s lower than expected sales figures, S&P’s analysts saw fit to retract their positive outlook. The outlook reversal had little effect on Palm’s stock performance for the day - all the damage was dealt earlier in the week.

Thanks to amateurhack for the tip!

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50 Comments

yep. going to get bought out soon.

if palm was the kind of company that would dispel a rumor and recognize loyal fans, i'd think otherwise.

bye bye palm.

Goodbye Palm! It's been a fun 10 years for me and I have loved your products, but when you tell big lies and are not honest with us, YOU suffer as well as us customers.

I just hope my Pre Plus lasts me several years after the tech support runs out, because I love my phone. I hope I can get four years out of it like I did with my Treo 650.

What big lies? Talk about production shutdown was verified.

Video by February - Yep.

Flash controlled by Adobe - Yep.

I guess you haven't been following the news, but it was confirmed the reason the shutdown in China wasn't for the bullshiz line Palm fed everyone about Chinese New Year, but because demand was low.

Since then their credibility has been questioned, and their stocks have suffered because of it.

That lie my friend.

confirmed by who and when, link to the real confirmation please.

I believe you asking for the moon friend, the only profes
anyone has just what they reading.
because someone like wall street guys said something like
that we should believed him.
So tomorrow they will come with something about Apple so we
will believe it too. People just get real life and better
thing to do, as long your phone function and working what
else do we need more, who is not happy with his PRE just go
and get you NICE IPHONE Apple has $40 bln. please do that
OUT CRYING BABIESSSSS...

another bad news

hopefully this can change with c40 and correct marketing!!! And speeeed!!! Long live webos!!! I'll never be able to upgrade if webos goes down..nothing else is better!!

its funny how the stock market works. If analysts say a company is gonna fail, the company is MORE likely to fail because they will lose the investors they need to succeed. and Vice Versa...

it makes no sense really.

Well, nothing's stopping you from finding poor, deserving, underappreciated companies for you to give your money to. That way you can channel your hard-earned money to the truly needy companies out there.

i'm just saying, its too often that the horde mentality is actually the cause of demise. I know its more complicated than my statements.

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful" - Warren Buffet

His strategy will pay off big time if Palm can finally communicate the value of WebOS to the buying public.

Warren also says,

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks."

Grrr, and I just bought 100 shares. I knew I should have waited another day.

The stock went up today. I don't think any more downgrades are going to hurt the stock at this point. More actual news, maybe, but analysts have already had their say.

This news came out early in the morning and the stock still went up

That's because people are picking it up as a bargain. I still think the whole thing is rigged. "Let's downgrade and talk it down and then when all the idiots sell, we'll buy it up!"

I think if Palm survives the next 6 months, you are going to really like that $6 price you bought at. Unfortunately, it is a big risk. If I had money to speculate, I would would buy 100 shares at every 1/4 dollar from here to $8. Unfortunately, I may need the 6 grand I have in savings so no speculation here.

I see, I didn't know this info came out this morning. I don't think it would have changed my mind, but I was thinking that if this was released late in the day, the price might go down a bit more tomorrow and I would be able to buy at a lower price.

@armchair Commando this news came out early in the morning and the stock ended the day up even though this was released.

Hopefully Verizon's price drop ($49.99/Pixi, $99.99/Pre) along with the renewed marketing push will help boost sales and improve the outlook.

You notice they're very careful with words. They said they turn negative, but that really means it'll stay speculative.

It's all the horrible advertising. Their marketing manager should be FIRED and sued.

WHY DONT THESE ANALYST STOP ANALYZING SPECULATION BASED ON SPECULATION WHICH ARE BASED ON OPINIONS WHICH ARE BASED ON BIASES.

Sorry, speculation is how this market works. In fact it's how the economy works. People have a perceived value, then it has value.

a degree of spectulation is inherent when you're in between earnings reports but to be fair. The Palm stock tanked based NOT on rumor or spectulation but Palm's own executives coming out and announcing ahead of time that sales were not going well. Palm was the catalyst not speculators. But the other point is in this case those who spectulated that sales were down were proven correct by none other then Palm itself. tough news but if palms sells a lot of phones, makes a larger big profit the stock will go up. period.

Well, if you think they're undervalued, set the market straight. Go buy 1000 shares at $10 each.

You sound like a rational guy. They're not paying dividends, they're not making earnings. So how much is a share worth?

Sometimes the analysts are right. Shoot the messengers?

Ouch!

That's what I said when I sent in the tip. It's not as bad as it sounds; but it's another black eye for them in the press.

Palm's financials are to be released on Friday, and then we will know more. I'll be waiting to see how they've progressed on their debt retirement, and be looking for a hint as to inventories/supply chain saturation. They indicated that they had cash/equivalents last week of $500M, which is not a ton for them in their market, but probably enough, given even their underperforming sales numbers, to last them through the year so long as they don't make any big mistakes. R&D numbers will be interesting to look at as well.

I still believe that it will be difficult for any corporation other than Microsoft to buy them out. MS hasn't made even the slightest indication they would be interested, investing heavily in WPS7. Palm would be too expensive to take by force, and too toxic to touch otherwise.

Financial results are next Thursday (the 18th), not this Friday.

I stand corrected. Sorry about that.

Oh man, I just got a pre plus. It was between this and the droid. Should I be worried for my pre? I like it so much more than that clunky droid.

Don't worry. Palm is not going under, and they're not being bought out. Palm has good management right now, and I think that they have a better, stronger future ahead of them.

Agreed. The market is full of companies that turned things around with less going for them than Palm. Palm has laid the groundwork for success, and if managed properly, it would not surprise me to see all the negative press of late change back to cautiously optimistic at the very least.

Both the Press and Wallstreet make money by volatility. Wait and see. With just a few positive reports tagged to better sales, which is very possible given new carriers, a second push on Verizon and possibly new devices, the analysts could and would likely change their tune.

For me Palm has already delivered big time. I love the Pre form factor and there is nothing like webOS when it comes to pushing and managing a lot of information and apps.

(My only complaint at this point is the lack of DataViz's Docs to Go and microphone APIs for a voice recording app. Otherwise Palm's webOS is firing on all cylinders -- Oh yes -- And better advertising. If you're going to spend the money to advertise, spend it well. The current Palm website [boring and uninformative] and the Verizon "Mom ads" were and are both just pathetic.)

With Palm on a downward trend it means your battery life will suck and you'll be highly challenged to set up a conference call. And you'll be less likely to find complementary coffee in the waiting room when you have your Pre's oil changed.

Palm is going no where!!! Management rocks!!! Look at the progression

Palm is going no where!!! Management rocks!!! Look at the progression

Also, there is no place like home.

After spending hours on an iPhone 3Gs, days on a Droid and Droid Eris (missing BB only), I can honestly say none were as impressive as what Palm has devised with the basic functions of webOS.

Palm's webOS is by far the best at managing lots of information and managing lots of open apps via card view multitasking. While the other phones were fine, I could not see myself being satisfied with any other OS outside of webOS. It's that good!

I've become such a fanboy of webOS that this news makes me disconsolate. I then laughingly remind myself that it's just a damn cell phone. But I love webOS and I hate knowing that it could die even though it is so beautiful.

Here's a way to hedge against bad press from Wall St... partner with google and figure out a way to install Android on the Pre (and Pixi). That will give folks a real choice. Marketing will work in their favor as Android is quite heavily hawked out there.

Geeks can do the installs themselves and others can simply buy the Android version of the phone. Sales folks have even more phones to sell and can pitch the phone simply as another droid if needed (Palm needs to move handsets - that's the key).

Of course, folks can stick with (and buy ) WebOS as well. That's what I'd do.

Why doesn't Palm just go Private and buy back the company and take it off the stock exchange.

That would end all of this and then they don't have to be responsible to stock holders and can focus on the company and it's products!

I think that would be a better and safer solution then getting bought up by someone that would just buy it, to get it off the market.

Rob

I can think of a long list of reasons why they absolutely should not do that. Topping the list: 1.)it would be disastrously expensive; Palm would have to liquidate everything just to come up with the cash, and 2.) it would make it harder to raise cash like they have through special stock offers.

Do they have the funds to do that? Not being facetious but are they seriously in a position to do that?

EDIT: AmatuerHack beat me to it :-)

There is $1.05 billion of outstanding Palm stock out there. It'd cost at least 150% of that to buy back all the stock (buybacks increase the stock's value).

Palm has about $500 million in cash, investments, and short-term assets.

Given that Palm's 52 week high is around $18, I would bet that if Palm announced they were going for a 100% buyback the price could easily hit that price or higher in a very short period of time. So then we would be looking at a $3B+ for Palm to complete the process, not to mention the other associated costs of making it happen.

Honestly, that would be like liquidating all your assets to pay off your mortgage, then getting foreclosed the next week because you could not pay your $50 property tax bill.

My sister just got a my-touch 3g from t-mobile. i tried it for a couple of hours and i kept trying to swipe apps away by mistake cause im so used to palm os! i was trying to run her music and web at the same time which it does but its not at the ease of web-os! whats funny is that when i show my sister my phone and how easy it is to operate she's jealous. another thing that is funny is that when she went to t-mobile she said that my brother has a pre and i want a smartphone close to that and the salesman told her palm pre sucked! my sis thinks my pre rocks and if she wasn't stuck with t-mobile she'd be a pre user now! that phone sucks big time compared to my pre!

A few extra thoughts; i know web-os is still young and to see the potential is so awesome! I find something out new on my phone everyday and thats why i love it so much. Also, i wish we can start getting some of the big apps to web-os--aka: espn, cbs sportsline, cnn, ustream, etc... Maybe we should as precentral users figure out a way to flood these sites with the requests for their apps! Lastly, please realize this is 1st gen software and hardware and i have faith in palm that the sky is the limit with both! i cant wait to see what the future holds for palm! go palm! go pre! go web-os! go precentral!

S&P...along with those other analysts that did reports last week about Palm...can all BITE ME! I used to work for CitiGroup as a Financial Advisor...i left on my own terms to continue my education. Anyhow, these reports & "speculations" not only hurt these companies and stocks...but they hurt the consumers with the products. I've been a Palm fan since I've had the Pre and I am confident that they can push their stock higher than even when the Pre was anticipating...but only if they stay focused...and they're going to need our POSITIVE attitude to do that. Yes, it is taught in business class that companies cannot let the public put an emotional emphasis on it's dealings...but it's easier said than done. Financial analysts and stock market mumbo jumbo is one thing, but if you're hearing your own customers talking negative things every which way...its a stressful situation. We are taught stress management in business class as well...but again it is easier said than done.

My whole point is this: put your trust in Palm and let them know you're behind them. Recommend the Pre or Pre + to your friends. Recommend the Pixi or Pixi + who are looking for something "a bit" more technical and advanced than the average feature phones. We all have are gripes with the flimsy hardware issue...but we need to realize that Palm came into the ring w/ limited funds from the gate. Nobody will disagree however, that webOS pretty much blow away the competition.

Here's a little food for thought: if we push sales up and Palm rakes in the dough...we won't see plastic phones anymore. Sound good? Start showing off your phones and get them selling like hotcakes.

"...if Verizon employees won't do it, I guess we'll be the ones to do it."

It is rather clear at this point that Palm will not continue as a going concern. I still say they will get purchased in the next 9-12 months after burning through cash and seeing the stock price settle down some more.

But, these are hard times and Palm really does not have a lot to offer most established mobile players so it could be that they liquidate and sell off the brand to a contract manf. who is looking to buy a brand for their phones.

I hope palm weathers this. I had a nightmare last night that I dropped and broke my Pre. When I went to exchange it all they could give me was some Samsung phone... I couldn't get back to sleep for hours...

For this Am keeping my old friend Sprint and it partnr Palm.
As long my phone ringing and receiving calls...