A rule of thumb suggests that when top executives jump ship, investors should follow them over the guardrails.
Investors in palmOne
The resignations are timely. palmOne shares plunged in December after the company warned that delays by wireless carriers in rolling out its new Treo 650 smartphone would put a big dent in quarterly earnings. In Q3, industry analysts Gartner Group
The stock fell another 5% this morning. With Bradley heading out the door, the market appears to have lost its confidence in palmOne.
Of course, there is the always a chance that things can get better. Perhaps a change in leadership is what's needed to rejuvenate the company and its share price. palmOne states: "The company is now positioned for profitable growth and success. We respect Todd's desire to move upon this key milestone and appreciate his willingness to support the company through its transition." And at today's $25 share price, the stock looks tempting. You can buy palmOne for just 14 times 2005 earnings and less than 2005 sales.
But I wouldn't buy it. Resignations usually mean trouble.
For more, see palmOne Down, but Not Out?.
Fool contributor Ben McClure doesn't own shares of any companies mentioned in this article.
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