J.P. Morgan Cuts Palm Rating
J.P. Morgan downgraded Palm Inc. (PALM )to market perform from long-term buy.
Analyst Paul Coster says Palm's decision to end its pact to acquire Extended Systems is a blow to Palm's stated strategy for selling into enterprise. The preannouncement shortfall is a result of the delayed shipment of Palm's M500 series and a production ramp up impeded by engineering problems leading to inventory stalling in the channel -- particularly in international markets. Coster is confident Palm will get a credit line from banks to navigate through any cash problems.
He dropped his $0.03 fiscal 2001 (May) EPS estimate to $0.10 loss, and cut the $0.10 fiscal 2002 EPS to a $0.07 loss. He also cut the 12-month target to $6.