Posts Tagged ‘smartphone’

Palm Continues to Suffer (PALM, AAPL, GOOG, RIMM)

March 18, 2010 Leave a comment

Palm Inc. reported earnings after the close today, and what they reported wasn’t pretty.  Expectations were for a loss of $.42 per share on revenue of $316.19 mm.  Reported numbers were $366 mm, which was actually higher than expectation, and a loss of $.61 per share, which was not.  After being up by about 5% during the day on a lot of short covering, the stock tumbled on the news in after hours by over 13%.

Adding to the woes are increasing inventories at the carriers.  This is an issue because Palm records sales when the products are shipped to the carriers, not when they are actually sold to consumers.  Thus, large stocks of unsold inventory will prevent Palm from recording much in the way of sales until that backlog is cleared.  Thus, Palm issued revenue guidance for the upcoming quarter that is half of the $305.77 mm that analysts were expecting.

My Palm article in September hypothesized that the stock (then at 17.40) would drop as consumer adoption of the new operating system would lag.  Back then, Palm was shipping over 800,000 units per quarter, that number has since increased to over 900,000 but sell through to customers has decreased to 400,000 units.    The stock in after hours dropped to below $5 as the long term survivability of Palm remains in doubt while they try to compete against the mighty Apple, Google and RIMM.


Disclosure: Long GOOG, no position in any other stock mentioned



November 2, 2009 1 comment

Research in Motion BlackBerryPretty simple rules based buy. Research in Motion (RIMM) should be trading above $60 using the most extraordinarily conservative projections according to discounted cash flows. It should trade around $80-90 using more realistic projections and around $110 using bullish scenarios.

$56.60 was also about 15% under my average price which usually calls for me to add more to my positions if I still feel good about them. I know there is lots of concern that Apple’s (AAPL) iPhone and the new Android competitors from Google (GOOG) such as the Motorola (MOT) Droid will hurt Research in Motion and to be honest I agree. However, I think that the concern has been overdone. Research in Motion is strongest in the business sector where the iPhone and other smart phones have irtually no traction. Corporate spending is falling now because of the recession but I would prefer to buy this fear rather than sell on it because it is temporary and only related to the recession.

The trend in mobile smart phones is strong and I believe Research in Motion will continue to capitalize on its growth.


Disclosure: Long RIMM and GOOG

S GRMN @ 37.63

September 29, 2009 1 comment

Garmin (NASDAQ:GRMN) introduced its new product today, a hybrid phone/gps system that will retail for $299 after rebate on AT&T, with an additional $5 monthly charge.

This device represents the company’s latest attempt to thwart those who are forsaking its stand-a-lone GPS systems for applications on their smartphones.  Recently, the rise of GPS navigation for high-profile products such as the iPhone 3G (NASDAQ:AAPL) and the Blackberry Tour (NASDAQ:RIMM) have driven customers from companies like Garmin and TomTom, who only sell independent navigation systems.  iSuppli has predicted the the market for so-called PNDs will increase by only 15% over the next 5 years, while over the same period shipments of smartphones will increase by over 400%.

It is for this reason that I am recommending a sell of GRMN.  They are being battered by an industry that is much bigger than themselves, and with this much-delayed new product, they needed to hit a home run.  From initial impressions floating around the internet, the phone isn’t actually described as bad.  In fact, some of the reviews are quite positive.  But relative to the other smartphones on the market, the price is too high, as you can get an iPhone 3Gs with a GPS application from Navigone or TomTom for much less if you include the PV of the $5 monthly fee. There simply is no compelling reason for consumers to buy this phone over an iPhone or a Blackberry, and it is for that reason that I am bullish on both those companies.

Disclosure: No holdings in GRMN, Long AAPL and RIMM.