Palm Inc.PALM

Morningstar Rating

Stock Research and Analysis

by Joseph Beaulieu

Palm, an early innovator in the mobile device market with the Palm Pilot, leveraged its expertise to make an early splash in the smartphone market. But its scattershot efforts during the last several years have left the firm lagging the competition Read more

Bulls Say

Palm has an all-star product development team. Two of its executives were instrumental in the development of the Palm Pilot, Treo smartphone, iMac, and iPod.

Ongoing distribution agreements with most of the major mobile operators in the U.S. (and many overseas) should provide a growth platform for Palm's next generation of products.

Palm's solid brand name and dedicated developer community could provide a foothold from which the firm could make a stunning comeback in the smartphone market. Read more

Bears Say

The Pre is entering a crowded market in which consumers and developers have many choices. Even if the Pre turns out to be the best device technologically, Palm has its work cut out for it in developing the Pre into a franchise, attracting developers to its platform, and capturing market share from established rivals.

Leading companies such as Nokia and Research in Motion have considerably greater resources, better distribution capabilities, and more clout with the wireless carriers who drive a large percentage of smartphone sales.

Although the smartphone market is expanding quickly in unit volumes, increasing competition combined with customer expectations is driving average selling prices downward.

Sales of Palm's PDAs are declining rapidly, offsetting much of the growth from Palm's smartphones. We expect the PDA market to shrink to insignificance in five years as smartphones move downmarket. Read more

Strategy

Palm's sights are set firmly on the smartphone market, and with the Pre it is aiming for the high end of that market. Given that the company doesn't have the scale or distribution to effectively compete Read more

Management

CEO Jon Rubenstein is one of the most respected product development executives in the high-tech industry. Rubenstein joined the company as chairman and senior executive of product development in June 2007. Prior to that, he was a senior executive at Read more

Profile

Palm is a leading producer of mobile devices, including personal digital assistants and smartphones. The company spun off its software operating system as a public company, Read more

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