Shares of smart phone makers Palm and Research in Motion (RIM) sank as Palm slashed guidance for the fiscal second quarter and an analyst said RIM was no longer undervalued, an Associated Press report said.
The Associated Press report said Nasdaq-listed shares of Palm plunged $1.18, or 7.7%, to end at $14.19 on more than four times the daily average trading volume, approaching the low end of its 52-week range of $13.23 to $24.91.
For the second consecutive quarter, Palm pre-announced a shortfall in revenue, the report said.
In September, shares sank on news that the Sunnyvale, California-based company would miss its fiscal first quarter sales outlook by about $30 million.
Yesterday, the smart phone maker said it would miss revenue targets by more than $40 million, and earnings targets by at least 4 cents per share for the current quarter, due to a delay in Cingular Wireless's certification of its Treo 750 for sales in the US
Several analysts followed with cuts to earnings estimates for 2007 and 2008.
'The shortfall highlights Palm's inability to deliver on conservative milestones,' wrote Bear Stearns analyst Andrew Neff in a note to investors.
The analyst wrote that while Palm has continued to make progress in offering new models, including the lower-priced Treo 680, competition is intensifying with other device makers that are offering sleeker designs with more features at lower prices, the Associated Press report said.
Looking more broadly, Neff said he sees minimal impact on Research in Motion, whose popular BlackBerry devices are differentiated by their a proprietary email service.Still, RIM's stock closed down $1.01 at $134.29 on heavy Nasdaq volume after BMO Capital Markets analyst John Bucher wrote in a note to investors that the stock's valuation was no longer compelling.