When, oh, when will Palm
Management says the shortfall is due to a major carrier failing to certify the Treo 750 -- which has already invaded Europe -- on its network. Otherwise, CEO Ed Colligan said in a statement, "Smartphone sell-through across our existing products is strong."
I've no trouble believing that. The Treo is a great product. Heck, I own one. So does Foolish co-founder David Gardner, which partially explains why he recommended the shares to Motley Fool Stock Advisor subscribers. So does half of Fool HQ.
Popularity, however, can't be a substitute for excellent management in the face of tight competition from Research In Motion
An unfair comparison, you say? Maybe it is. But the math with respect to yesterday's announcement is positively startling. If the estimates are to be believed, the Treo 750 was to account for anywhere from 25% to 35% of Q2 profit.
Why on earth, then, didn't someone make certain that Cingular or Verizon
By the numbers, Palm looks cheap. Roughly one-third of its market value is in cash. Meanwhile, analysts expect the company to grow earnings by only 10% a year for the next five. Compare that with an industry in which the average firm is expected to grow by roughly 14% annually over the same period.
Were Palm to only match that 14% average and generate no better 3% gains thereon till eternity, discounted at 11%, the stock would be worth at least $18 a share by my back-of-the-napkin math. But, of course, I'm assuming that competent management can generate at least industry-matching growth. As of today, that's anything but a sure bet.
Dial 'F' for related Foolishness:
- So far, Ed says "no deal" when it comes to selling Palm.
- Find out why one investor says he may want to reconsider.
- At least one Fool sees Palm as a compelling value.
Palm is a Motley Fool Stock Advisor selection. Ask for us anall-access pass, and you'll get a backstage look at all of the stocks that are helping David and Tom Gardner beat the S&P 500 by more than 43 percentage points as of this writing. It's free for 30 days. All you have to lose is the prospect of a richer portfolio.
Fool contributor Tim Beyers , ranked 1,129 out of 14,316 in Motley Fool CAPS , still owns a Treo 600, which he beats up every day. Tim owns shares in Nokia. Get the skinny on all of the stocks he owns by checking Tim's Fool profile . The Motley Fool's disclosure policy is never on hold.