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Morgan Joseph Downgrades Palm (PALM) to Sell, Saying Pre Sales May Disappoint

August 13, 2009 8:28 AM EDT
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Morgan Joseph downgrades Palm (Nasdaq: PALM) from Hold to Sell with a $7.50 price target, saying checks shows that Pre sales may disappoint.

The firm commented, We are downgrading our rating on Palm shares to SELL from HOLD given our belief that Pre sales have slowed significantly. Our checks have shown that Pre sales have slowed to approximately 100,000 units in July, from approximately 200,000 in June, and we believe August shipments are tracking lower than July's. This would bring Pre shipments below our previous 400,000 estimate for the F1Q10 quarter. As such, we have lowered our Pre shipment estimates to 350,000 for the August quarter. We believe that our 400,000 units estimate for Pre was a low estimate relative to Street expectations and, as a result, believe that should the company even achieve these numbers, it would be viewed as a disappointment by investors.

The firm lowered 2009 sales and non-GAAP EPS estimates to $484mm from $677mm and to a loss of $1.72 from $1.52, respectively. They also lowered 2010 estimates to $612mm from $879mm and our EPS loss to $0.90 from $0.63, respectively.


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