Palm Being Dropped from S&P 500

Standard & Poor's has announced that next Tuesday it will remove Palm Inc. from its S&P 500 index . It said the move was brought about by Palm's recent low stock price and the fact that its market capitalization, at $585 million, ranks in 496th place on the list.

After holding fairly steady at about $1.50 for several months, Palm's share price recently dropped to around a dollar after its Board of Directors announced a plan to do a reverse stock split.

The news it is being dropped from the S&P 500 has been a further blow for Palm's share price. It closed yesterday at 98 cents. It is currently trading at 83 cents.

The S&P 500 is designed to measure performance of the entire U.S. economy through changes in the market value of 500 stocks representing all major industries. The index hasn't fared well recently; It has dropped about 20% in just the past three months.

Palm will be replaced by Monsanto, which makes agricultural products.

Related Information:

Article Comments

 (49 comments)

The following comments are owned by whoever posted them. PalmInfocenter is not responsible for them in any way.
Please Login or register here to add your comments.

Comments Closed Comments Closed
This article is no longer accepting new comments.

Down View Full Comment Thread

This is sad...

I.M. Anonymous @ 8/8/2002 10:18:47 AM #
Well just another blow to the once pro-active and innovative Palm inc.

Hard to believe that this was the same company that took on MicroSoft a few years back and won the handheld market.

Palm is dead
I.M. Anonymous @ 8/8/2002 10:22:01 AM #
Told you guys that soon it would be off the markets. Soon it will be off the nasdaq. 30 days will soon be up.

I hope something happens to change this soon. We don't want to live in a M$ world! ;)

RE: This is sad...
Fammy @ 8/8/2002 10:32:04 AM #
Won't the reverse stock split keep them from being delisted on the NASDAQ?

_____
Fammy
RE: This is sad...
I.M. Anonymous @ 8/8/2002 10:37:38 AM #
Will the reverse stock split keep them from being delisted? -- Yes and no. Yes, it will immediately drive up the share price, but that action is viewed in the industry as a sign of desperation. Generally speaking, reverse splits such as the one contemplated for Palm only erode confidence in the company and cause further deterioration of the stock value going forward. Historically speaking, reverse splits never work for very long.

Unfortunately, I feel that the only thing that will save the company is for Palm to put a flawless, compelling product on the market immediately. I don't think Palm is quite ready to do that, and I doubt the first product out of this new round of handhelds will be flawless.

I want to believe that it's not too late for the company. I've been a Palm fan for sooooo long. However, all indicators point to a buyout by some company like Apple or Sony in the near future. Palm is ripe for the pickin's, and Sony has invested too much in their product line to let Palm go under and lose access to that operating system.

JBH

RE: This is sad...
Altema @ 8/8/2002 10:43:40 AM #
At its current price, the reverse split would bring it to $1.66. Almost but not quite good enough. If the stock price comes back up and stabilizes, they may get back on, but I'm an engineer and not a market analyst.

RE: This is sad...
I.M. Anonymous @ 8/8/2002 11:19:33 AM #
Reverse split ratio is between 1:10 and 1:20. So the range after the reverse split (based on a 0.78 price) would be between $7.80 and $15.60 per share.
RE: This is sad...
atrizzah @ 8/8/2002 3:29:23 PM #
People act like Palm is a dying company, which it is *not*. This still have hundreds of millions in cash. Right now, the opposite of what was going on a few years back is happening. While then, the market had uncontrollable optimism, now it has uncontrollable pessimism. Palm is highly undervalued now, as are many other companies who are still financially strong. Keep in mind that they still hold top market share in PDA's everywhere.

Peace Out
Alan
RE: This is sad...
Foo Fighter @ 8/8/2002 4:00:08 PM #
> "Keep in mind that they still hold top market share in PDA's everywhere."

Yes, but that lead is steadily eroding away. Palm is losing market share to Sony and Pocket PC, and there is no indication that trend will reverse any time soon.

Not good...

I.M. Anonymous @ 8/8/2002 10:32:29 AM #
These developments do not bode well for Palm.

GOOD!

They move at such a glacial pace that they won't be aware of their own death for 'prox 3 years after it's happened.

WELCOME MONSANTO!
I think in comparison they might actually be more in tune with the handheld industry.

RE: Not good...
I.M. Anonymous @ 8/8/2002 2:37:33 PM #
I say Serve them right!
They been so slow and so comfortable with their position as the leader yet everything changes since the early announcement of the Palm m500 series.


Thanks, Karl

I.M. Anonymous @ 8/8/2002 10:56:41 AM #
How much was Karl Yankowski and the board paid for driving this company into a bottomless hole?
RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 11:00:38 AM #
Ummm, my guess would be he's been paid nothing since he was fired almost a year ago. You really should try to keep up with current events.
RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 12:40:02 PM #
As I wrote, "How much was Karl Yankowski and the board paid . . ." The word choice of "was" clearly indicated this to be a thought involving the past tense. Furthermore, "paid" indicates not a current issue but a past concern. In other words, "How much was Karl and the board paid in the past for destroying this company?"

Karl ran the company into the ground in the past. The other board member, both current and past, share responsibility for the current crisis. However, I'm pointing the finger at a former CEO who did nothing to advance the company's position or product line.

I'll continue to keep abreast of current affairs. I suggest you pick up a copy of English for Dummies.

RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 1:20:03 PM #
"I suggest you pick up a copy of English for Dummies."

Maybe you should get a better book because your sentence should read "How much were Karl ..."

RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 1:28:35 PM #
Alas, his name is Carl Yankowski with a "C". I still have his name card in my drawer.

RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 5:23:09 PM #
What are you guys arguing about??

The answer is obviously... and

How much where Carl blah blah blah and blah blah blah...

RE: Thanks, Karl
I.M. Anonymous @ 8/8/2002 6:15:19 PM #
"Karl ran the company into the ground in the past. The other board member, both current and past, share responsibility for the current crisis. However, I'm pointing the finger at a former CEO who did nothing to advance the company's position or product line."

Actually, that idiot Benhamou is the one that ran the company into the ground, and continues to do so to this day. As long as his worthless butt is anywhere NEAR the board of directors, the company will never pull itself out of the cesspool he's driven it into.

RE: Thanks, Karl & BenhamLaden
I.M. Anonymous @ 8/8/2002 6:32:44 PM #
Well said.
This is the sad, sad truth.

Why can't they get their act together?

I.M. Anonymous @ 8/8/2002 12:20:15 PM #
What is wrong with these people? do they live in another world where palm is doing great and microsoft doesn't exist?

Message to palm (if anyone is listening/cares): WAKEUP AND START SHIPPING FREAKIN OS5 DEVICES NOW! and they better be good stuff with the options we've been requesting for years.


RE: Why can't they get their act together?
I.M. Anonymous @ 8/8/2002 12:29:13 PM #
Geez, take a Prozac and a few deep breaths.
RE: Why can't they get their act together?
I.M. Anonymous @ 8/8/2002 12:43:57 PM #
can you afford to breath? the stock just plunged 17%
RE: Why can't they get their act together?
I.M. Anonymous @ 8/8/2002 1:07:56 PM #
>can you afford to breath? the stock just plunged 17%

Uh, you're wrong. Palm has reported a profitable quarter.

RE: Why can't they get their act together?
I.M. Anonymous @ 8/8/2002 1:16:16 PM #
I don't think it's the last quarter or the next quarter. Plus they only expect "pro forma" break even in their next Q guidance, which really doesn't mean anything anymore. And even that people are wondering if they can meet amid weak market demand.

Palm, Inc. Sees Q2 Breakeven Results; Issues Q1 Guidance, FY 2003 Revenue Outlook-DJ Jun 25, 2002
Dow Jones reported that Palm, Inc. sees a first quarter pro forma loss of $40 to $45 million on revenue of $175 to $185 million. The Company expects second quarter pro forma breakeven results and fiscal year 2003 revenue of $1 billion. According to Multex, analysts expect the Company to report a first quarter loss of $0.04 per share on revenue of $180 million, second quarter loss of $0.01 per share and fiscal year 2003 revenue of $1.03 billion.

RE: Why can't they get their act together?
I.M. Anonymous @ 8/8/2002 2:39:25 PM #
With 3 new models still having technical problems..I doubt they will be able to rush the products out on time, again.

I work in an asian company that design/manufacture some of the parts of the new models and yet there been so many changes that we are all worried when will the final thing be out of the street? when Sony launches theirs? Palm is too slow and fickle minded about their products, guess it is the lack of confident from the last nasty experience they had with the Palm m500 series.

Who would buy Palm?

I.M. Anonymous @ 8/8/2002 2:15:28 PM #
I'm just wondering which company would be best served by buying Palm. At this point palm looks like a very attractive bargain. Could it be Sony, IBM, Apple, merger with handspring, Dell, or Samsung.

PS. Did anyone ever find out who donated that 50 million to Palm a while back? it's funny how we never really heard anymore about that, unless I missed it.

RE: Who would buy Palm?
I.M. Anonymous @ 8/8/2002 3:30:16 PM #
IBM...

What's the big deal?

I.M. Anonymous @ 8/8/2002 2:26:36 PM #
Two years ago ALL stocks were overvalued. Every stock on the market has since deflated to something much closer to its true value, based on fundamentals like P/E ratios.

The same is true for Palm. Their price could drop to $.05. So what? The important thing is that they become profitable. If that happens, the company is viable, just not worth much to investors.

RE: What's the big deal?
Guppy @ 8/8/2002 11:03:48 PM #
The same is true for Palm. Their price could drop to $.05. So what? The important thing is that they become profitable. If that happens, the company is viable, just not worth much to investors.

Actually, the stock price does matter. According to Nasdaq regulations, if a company fails to maintain a >$1 price for an extended period of time, it is in danger of being delisted.

Of course, you can continue to trade the stock over-the-counter, but once you're no longer listed, it becomes very difficult and expensive to raise capital.

As if this matters!

I.M. Anonymous @ 8/8/2002 3:02:40 PM #
Guys, you forget the company was split down the middle! Thus Palm is just a hardware vendor and no OS is part of its assets. Surprised this didn't happen earlier. It will be back within a year.

RE: As if this matters!
I.M. Anonymous @ 8/8/2002 3:31:36 PM #
It does matter! The split hasn't occurred yet, dimwit.
RE: As if this matters!
I.M. Anonymous @ 8/9/2002 3:18:45 AM #
Yes it has moron!
RE: As if this matters!
I.M. Anonymous @ 8/9/2002 7:46:43 AM #
While the company has split into two divisions - one hardware, the other OS, the shares that are traded on the market entitle you to a piece of both bits of the company.

After the reverse split, the next step for Palm will be to spin off the OS division giving shareholders X number of new shares in Palmsource for each share held in Palm Inc.

This will automatically cause Palm Inc's shares to drop by approximately the value of the new shares.

Re: Palm's tumble to around $1 from $1.50, I am not sure the reverse split announcement is to blame entirely. I think this is more attributable to the general downturn in the market in the past few weeks.

Finally, a company's stock price is merely an indication of what people are willing to pay for ownership in the firm. It does not represent the true value of the firm i.e. all its assets.

A lot of big companies are suffering with very poor share prices. Many are underperforming analyst price guides. The reason is that people in the market are taking a pessimistic view. However, given a couple of months of good news and no new Enron style bomb shells, prices will snap back up. Not to previous heady levels, but I can see Palm at $1.50 to $2.00 by October.

Removed stocks tend to OUTperform

ardee @ 8/8/2002 5:02:04 PM #
After the initial drop in stock price, stocks removed from indexes tend to (dramatically) outperform those still in the indexes. This has been demonstrated statistically. I can find references if you can't use Google to do so yourselves.

Wait until the price settles down and Palm may be a very good buy for the 1-year timeframe.

RE: Removed stocks tend to OUTperform
I.M. Anonymous @ 8/8/2002 8:49:00 PM #
Yeah, and 80% of stocks the go through a reverse split continue to sink. Take whatever stat you want. Palm is a gamble at best. The only money you will make on the stock is *if* Sony buys it. Right now, Sony is playing it smart. License the OS then pick up the entire property out of bankruptcy for 1/10th of its current price.

Palm is in a classic ''Death Spiral''...

I.M. Anonymous @ 8/8/2002 6:31:21 PM #
Digital Equipment Corp. (DEC), Wang Labs, C/PM-86, etc. etc.

"Death can come swiftly to a market leader. By the time you have lost the positive-feedback cycle it's often too late to change what you've been doing, and all of the elements of a negative spiral come into play."

- BILL GATES
"The Road Ahead"
Chapter 3

RE: Palm is in a classic ''Death Spiral''...
I.M. Anonymous @ 8/9/2002 8:50:26 AM #
"Those who fail to learn from the past are condemned to repeat it."

Sony will hostile takeover palm

I.M. Anonymous @ 8/8/2002 11:40:24 PM #
nuff said
RE: Sony will hostile takeover palm
abosco @ 8/9/2002 12:08:30 AM #
No it wasn't... please elaborate.

_______________________________________
So how's that nice girlfriend of yours?
Oh she got hit by a car, she's dead.

It's just fate, lean back and accept it

I.M. Anonymous @ 8/9/2002 4:29:03 AM #
Goodbye Palm! The best part about all of this is that Palm's own supporters are the one's who have brought this on. You all complained about companies that have tried to keep this fossil of a product fresh. Well, this is what happens to stale technology. Once 'PALM' is delisted from the NASDAQ, you can all bend over and kiss your sorry butts goodbye. :) Regardless of whether Sony or Apple buys the OS, you have seen the end. Superior products have a way of snuffing out the stagnant. Welcome to the world of PPC. :)
RE: It's just fate, lean back and accept it
I.M. Anonymous @ 8/9/2002 6:47:41 AM #
funny how those last 2 sentences contradict each other
Top View Full Comment Thread

Account

Register Register | Login Log in
user:
pass: