Another day, another volatile session for Palm (PALM) stock. Following yesterday’s spike, Palm is again among the most active issues on the Nasdaq but the stock is giving back most of yesterday’s gaines. Shares are currently down 74 cents or 12% to $5.30.
The latest report from Reuters says that Palm approached Huawei, a Chinese telecommunications equipment company, in February to discuss an acquisition. A source says there’s been no progress since then.
At least for today, the market has decided takeover speculation has driven the stock too high — shares were up 50% in four sessions heading into the open today.� If a takeover occurs, Canaccord Adams analyst Peter Misek sees it at an equity value of $4.37 per share, based on a “probability -weighted enterprise valuation.”� Misek had previously cut his Palm target to zero.
CL King analyst Lawrence Harris also thinks a deal could disappoint. In a note today, he writes: “Given the operating losses over the past 10 quarters, its anticipated near-term cash burn, the disappointing sales at Verizon [Wireless] and increasing competition from Apple, (AAPL) Microsoft (MSFT) and other smartphone makers, any potential offers to buy Palm could be below the current share price.”
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