Bbonnn
Member
Registered: Jun 2001
Location: Northern California
Posts: 12 |
 Sad story: S&P 500 dump Palm.
FYI ... was struggling with whether or not this needed to be posted here, but it is, I suppose, a sad occasion to be marked with solemnity and reflection. <sigh>
http://biz.yahoo.com/rc/020808/tech_palm_stocks_1.html
quote:
Reuters Company News
Palm shares slump after cut from S&P 500
By Ellen Wulfhorst
NEW YORK, Aug 8 (Reuters) - Shares of Palm Inc. (NasdaqNM:PALM - News) lost nearly a fifth of their already-depressed value on Thursday, a day after Standard & Poor's said it would drop the struggling handheld device maker from its benchmark S&P 500 index.
The S&P cited Palm's market capitalization, which it said ranked No. 496 out of the 500 index companies, and its low share price.
Palm shares were off 18 cents, or about 18 percent, at 80 cents in early afternoon trading on Nasdaq, after earlier hitting a record low of 78 cents.
The removal from the index is effective after the close of trading on Aug. 13, when New York-based S&P said Palm would be replaced in the index by Monsanto Co.(NYSE:MON - News), a maker of agricultural products.
Shares in companies dropped from the S&P 500 usually decline because fund managers often have to dump the shares in favor of the newly added company to balance their portfolios.
"I think the stock and the fundamentals have parted company at the moment," said JP Morgan analyst Paul Coster about Palm. "The fundamentals aren't great but not this bad."
Despite weak demand, he said, "it's a great brand, it's dominant in market share, it's important intellectual property and it's well-managed. The contrarian investors should be taking a look at this stock."
Last month, Santa Clara, California-based Palm said it planned to seek approval for a reverse stock split to shore up its depressed trading price.
Palm dominates the global handheld market with a 32 percent share, according to second-quarter data from International Data Corp., but its grip has slipped as pocket PC devices such as those made by Hewlett-Packard Co. (NYSE:HPQ - News) gain popularity in the lucrative corporate market.
Experts say demand for such devices has slowed as consumers, faced with an uncertain economy, think twice about spending up to $500 on a device that mostly manages appointments and keeps track of contacts and memos. Moreover, those who already own handhelds seem to need a good reason to upgrade.
"There is the feeling that everyone who needs a personal organizer already owns one, so where is the growth?" said Kevin Burden, analyst with research group International Data Corp. "You really have to get people to upgrade.
"Everyone is getting dinged, not just Palm," he added. "The handheld device is all Palm does. It has nothing else to fall back on."
Experts also suggest Palm buyers are awaiting new devices with faster processors and more powerful software due later this year that will feature most of the software applications now only available on Microsoft-based devices.
Palm traded over $100 a share at the company's initial public offering in March 2000, when the Internet boom was still fueling new issues and the future of handheld computers was bursting with potential.
But those shares have languished below $2 since May, when the company pushed back hopes of an operating profit until later this year, and hovered near $1 for a week. The stock closed below the $1 benchmark for the first time on Monday.
According to Nasdaq rules, stocks that remain below the threshold of $1 for a sustained period risk being delisted.
Monsanto shares were trading up 96 cents, or about 6 percent, at $16.91 on the New York Stock Exchange.
|
08-08-2002 11:44 PM
Email This Page to Someone! |
Receive updates to this thread
]