PALM Target Lowered to $2

Palm, Inc. (PALM) has been growing unit volume as a result of continued popularity of its Centro smartphones. The launch of its Treo 800W gives it a more competitive offering at the high-end of the market.

Although Palm has surprised us by posting better-than-expected results for the second quarter, the maturing lifecycle of Centro and product transition issues led the company to lower expectations for the third quarter. We continue to believe that Palm badly trails Research in Motion Limited (RIMM - Analyst Report) in the smartphone market and will not be able to effectively compete as an independent company.

We therefore lower our estimates for 2009 and 2010 and reiterate our Sell rating with a lower six-month price target of $2.00.

Anita Mohata contributed to this report.

Read the full analyst report on PALM.

Read the full analyst report on PALM

Read the full analyst report on RIMM