Palm, Inc. (PALM)

Although 4Q09 revenue declined by 70.7% y-o-y and the loss increased y-o-y, results for Palm, Inc.'s (PALM - Snapshot Report) quarter were better than expected due to the ramp up in Treo Pro shipments and strong domestic and international carrier interest in its Web OS platform.

Although Palm has had some initial success with the Pre, its next-gen phone, we have doubts on its success as it competes with several much larger competitors such as BlackBerry and iPhone. As the Palm Pre was launched in June, we expect that its impact will be better reflected in the first quarter of fiscal 2010.

Palm has struggled to match supply with demand for the new handset. We have a low confidence on long-term prospects, so we reiterate our Sell rating on Palm but raise our six-month price target to $8.00.