Um, McNamee At Odds over Palm

Shorting PALM has been a fairly obvious proposition, but the dramatic decline in the shares last week might prompt some short covering, although the longer prognosis might be poor given the competitive climate.

We have been perplexed by Roger NcNamee’s interest in the company. His Elevation Partners fund ponied up a few hundred million a while back, and he was defending the stock in Barron this past weekend. 

Quite frankly, we found McNamee’s comments wishful, perhaps his time frame is different than most investors in this day and age:

“the shareholders voted to support management’s strategy to invest in products and operational expertise so that Palm could participate fully in the growth of smartphones.” NcNamee went on to add “you won’t see it in the numbers for a while, but the company is off to a great start.”

UBS analyst Maynard Um must not read Barron’s, and is not easily swayed:

He cut his rating on the stock today to Sell from Neutral, and chopped his price target on the stock to $5 from $9. Um cites “a lack of visibility to a differentiated portfolio, increasing competition, a lack of cash valuation support (due to the $9/share cash distribution), and aggressive pricing actions that are likely to weigh on margins, cause cannibalization and further downside risk to estimates.” Tech Trader

We have been suspicous of the financing arrangement Elevation set up with the company. Their involvement might deter additional suitors, although thankfully the Palm takeover rumors have not been heard in a while.

But maybe McNamee will be able to pull a rabbit out of his hat. With former Apple CFO Fred Anderson and Apple guru Jonathan Rubinstein on board, perhaps a little of their magic will rub off on Palm. But there is one missing ingredient here.

Steve Jobs, MarketWatch’s CEO of the Year for 2008.

And for now, Palm is but another disaster for public shareholders, in a market that has offered many duds for every Apple.

Palm is Down but Not Out
Barron’s

Palm: UBS Downgrades To Sell
Tech Trader Daily

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