Palm's stock jumps after analyst upgrade

Palm's stock rose after Morgan Joseph analyst Ilya Grozovsky upgraded his rating on the company, though he remained skeptical that the smartphone maker could meet its revenue targets for its fiscal year, which ends in May.

Palm shares climbed 36 cents, or 3.5 percent, to $10.53 in trading yesterday afternoon after Grozovsky upgraded Palm to "Hold" from "Sell." However, all is not rosy in his assessment, since it was based on the recent drop in Palm's stock, which has plunged nearly 30 percent since the company released in September its revenue forecast of $1.6 billion to $1.8 billion. Essentially, Grozovsky said investors are pricing too much of a discount into Palm's stock to account for a potential shortfall.

The analyst said that Palm's smartphone competitors--Apple, Research in Motion and others--all "offer significant competition, in our view, and stronger balance sheets to fund major marketing initiatives."

Palm shipped 783,000 smartphone units during the most recent quarter, a 5 percent drop from the 823,000 it shipped in the previous quarter, but up 41 percent from the 599,000 it shipped in the year-ago quarter. Actual smartphone sell-through, however, fell 29 percent from the previous quarter and 4 percent year-over-year.

Palm CEO Jon Rubinstein said the company plans to aggressively increase its marketing efforts. "We need to work very hard to get the word out and get people to understand why our products are better than the competition's," he said on the company's earnings conference call last week.

For more:
- see this AP article
- see this Briefing.com post

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