Palm stock plunges on downgrade, down 23% for month | webOS Nation

Palm stock plunges on downgrade, down 23% for month

by Derek Kessler Tue, 27 Oct 2009 10:33 pm EDT

Palm facing Android explosion

Investors in Palm aren’t going to look back on October 2009 with glee. For the month, shares in Palm are down 23%, closing today at $13.38 (down 6.3% for the day), after ending September at $17.46. Last month Palm’s stock was run up by a short squeeze, upgrade talk, and rumor of a takeover from Nokia, but since then the stock has been almost nothing but down, including more than 10% just yesterday and today.

For the past year Palm has traded violently, often outpacing the market in gains and losses (thankfully, the market’s been more up than down recently). The stock was hit hard today by analyst Tim Long at BMO Capital Markets, who downgraded Palm to “underperform” (the company will not meet expectations). Long stated that he believes, “Android will step up in importance at many operators, which, ex-Sprint, would put PALM in the position of fourth OS (AAPL, RIMM, Android) and sometimes even lower.” Additionally, Long also thinks that the Pixi, due to be released in less than a month, will only provide a modest bump in Palm’s numbers, and at the expense of Pre sales at that.

So is Long right? He has a valid point, and that is that Palm is one underdog company with their one OS and two phones competing with Android from multiple manufacturers on carriers worldwide, not to mention the powerhouses that are RIM and Apple. So how can Palm ever hope to gain larger dominance? By breaking pursuing an open relationship with Sprint instead of the sometimes boggling commitment that they have with the carrier.

For years Palm’s biggest launches have been on Sprint and devices have taken several months to migrate to other carriers. By the time they get there, it’s yesterday’s news. We get that Sprint has been good to you Palm, but we all know they’re small potatoes compared to the customer base of Verizon and AT&T. Future webOS phones need to land on bigger networks first or sooner if Palm wants to have a shot at a significant share of the smartphone market.