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Palm is Named in S&P's Latest Weakest Links Report

New Palm Inc LogoIn its most recent Global Bond Markets' Weakest Links and Monthly Default Rates report, Standard & Poor's has named Palm Inc. and 140 other US companies on its "Weakest Links" list of low quality debtors. The category represents entities rated 'B-' or lower, with either a negative outlook or ratings on CreditWatch with negative implications, that are most vulnerable to default according to S&P.

Time Magazine has just published an article which takes a look at some of the implications of the report and makes a passing mention about Palm being a "troubled firm." PalmInfocenter has obtained a copy of the report and we take a further look at how it specifically relates to Palm.

The report itselft does not go into any detail on Palm Inc's current competitive or financial situation. The company is merely included in the overall list of Weakest Links specifically in the "B-/Outlook Negative" section with $400 million in debt.

The $400 million in debt referenced in the S&P report comes from Palm's recapitalization deal last year. Palm secured $400m of new debt at the time to fund the cash distribution made to shareholders as part of the deal. That loan was made with JPMorgan Chase Bank, and Morgan Stanley Senior Funding, Inc. in October 2007. As per Palm's most recent 10-Q filing, the Term Loan does not mature until April 2014, so it is unlikely to impact Palm significantly in the immediate short term.

In total the report lists 181 companies and includes a wide range of firms such as Ford and General Motors, JetBlue and United Airlines, Eddie Bauer and Krispy Kreme doughnuts. S&P says the continued increase in weakest links (up 19 more companies since last month's report) is not surprising given the extreme volatility in the credit markets and the unfolding recessionary conditions in the U.S. It states that during the 2001 recession, the sharp rise in defaults accompanied the rise in weakest links and that in 2008 so far, 54 of the 61 publicly rated companies that have defaulted through Oct. 15 were weakest links.

Palm's current situation may appear bleak given the company has reported a loss for its five most recent quarters with no end in sight, however Palm has been preparing for and is actively engaged in this transitionary period for some time now. During the last conference call Palm CEO Ed Colligan remarked:

Our cash position remains sound and will allow us to navigate this period while still positioning Palm for a timely launch of future products. After that, we look forward to delivering consistent and growing revenue, profits, and cash flow.

Furthermore Palm's CFO Andy Brown commented in more detail on the companies cash position:

As Palm proceeds through the transformation Ed described, we are making every effort to improve cash flow while still adequately funding our transformation. [...] On a whole, our company had a promising August quarter, but we will continue to face pressure on our operating results for the next couple of quarters until we introduce our new platform and next generation devices and add carriers to distribute our Treo products. [...] As you can see, we have a couple of quarters of Palm's transformation left to navigate. We are closely managing our business for sustained profitability once we get through this transformational period.

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A Disclaimer

Ryan @ 10/23/2008 9:35:21 AM # Q
I am not much of an economist and I never did particularly well in accounting... That said, if my interpretation of the loan agreement or the debt situation is off please let me know. I tried to just look at the facts are they are outlined in each report.

The specific terms and details are mentioned in section 13 of the recent 10-Q.

RE: A Disclaimer
SeldomVisitor @ 10/23/2008 10:14:17 AM # Q
Palm has been on Moody's poop list for some time:

- http://www.forbes.com/afxnewslimited/feeds/afx/2008/08/14/afx5322091.html

That "B3" means essentially "highly speculative non-investment-grade".

RE: A Disclaimer
SeldomVisitor @ 10/23/2008 10:16:14 AM # Q
Here're Moody's rating definitions:

- http://en.wikipedia.org/wiki/Moody%27s

RE: A Disclaimer
Rastick @ 10/23/2008 9:39:31 PM # Q
I wouldn't want to own Palm's $400M of junk debt, but their cash situation looks fine and doesn't seem to justify the gloom and doom of this article. According to their Aug 31st financials, Palm had $167M in cash equivalents, $80M in investments and $30M in ARS. The $30M in ARS is after substantial writedowns, but isn't liquid. All this means they could burn through $10M of cash a month for the next 6 to 9 months and still have the money to launch their new product with a very reasonable cash cushion.

RE: A Disclaimer
SeldomVisitor @ 10/24/2008 4:52:18 AM # Q
I used to have $80 million in investments, too.

That was two weeks ago.

Now they're worth a buck fifty-seven.

Reply to this comment

What?

Tuckermaclain @ 10/23/2008 4:24:12 PM # Q
Somebody obviously hasn't seen the new green centro. It looks just like my '68 Pinto-maybe better.

Reply to this comment

PALM at $3.29/share

Gekko @ 10/24/2008 11:45:34 AM # Q

tempting to pick up 1,000 shares on a flyer...............

Palm Inc
(PALM)
3.29 Down -0.42 -11.32%
Open: 3.19 High: 3.61 Low: 3.07
Previous Close: 3.71 Volume: 1,090,585
Eastern Time

could get uglier and go a lot lower...............probably a bad idea......who would buy them? and why? and for what premium? and with what currency?

thoughts?

http://moneycentral.msn.com/detail/stock_quote?Symbol=palm&getquote=Get+Quote



RE: PALM at $3.29/share
SeldomVisitor @ 10/24/2008 11:50:09 AM # Q
It was $3.07 this morning and is heading back that way right now as I type.

You SURE you want to buy in?

RE: PALM at $3.29/share
Gekko @ 10/24/2008 2:28:09 PM # Q


PALM quote (NASDAQ Exchange - quotes delayed 15 min)
2.94 down -0.77 -20.75%

nasty

RE: PALM at $3.29/share
mikecane @ 10/24/2008 4:37:31 PM # Q
Palm won't even be a penny stock by the time this is all through.

Wouldn't it be funny as all hell if ACCESS, sick of ALPO going nowhere, simply BOUGHT PALM?

Cue more weeping and gnashing of teeth here at PIC.

RE: PALM at $3.29/share
Poopie @ 10/24/2008 7:28:36 PM # Q
you mean ... tempting to *short* 1000 shares.

Or rather, kicking selves for not shorting 10,000 shares at 6 when we were arguing about coffin nails.

PS: even-higher res iPhone rumors - http://www.intomobile.com/2008/10/23/apple-iphone-hd-spotted-online.html

320X320 SSS Die Die Die!

RE: PALM at $3.29/share
Gekko @ 10/25/2008 7:07:38 AM # Q

only play at this point would be an acquisition play. but who would by them? why? and for what premium? and with what? in the market where everyone is scrimping for cash on their balance sheets and trying to survive? who wants more debt? so you buy 1,000 shares at $3 and someone buys them at 20% premium and pays $3.60 = you made $600 before taxes. whoopee. not worth the risk IMO of the $3,000 downside to $0 that could very well happen.

and what happens when apple announces the $99 iphone?



RE: PALM at $3.29/share
SeldomVisitor @ 10/25/2008 8:37:44 AM # Q
Though this message board/web site isn't really the place for Palm financial discussions, the most-recently Short Interest on Palm increased a dramatic 25+% over its already-astronomic previous size - and did so in half a month.

Go here:

- http://www.nasdaqtrader.com/trader.aspx?id=ShortInterest

and type in "palm" and hit "Search".

RE: PALM at $3.29/share
SeldomVisitor @ 10/25/2008 8:39:49 AM # Q
Most ABJECT apologies - I confused the amount PALM Short Interest increased with the amount SONS Short Interest decreased.

So let's redo that entire post:

Though this message board/web site isn't really the place for Palm financial discussions, the most-recently reported Short Interest on Palm increased a still-dramatic 13+% over its already-astronomic previous size - and did so in half a month.

Go here:

- http://www.nasdaqtrader.com/trader.aspx?id=ShortInterest

and type in "palm" and hit "Search".

RE: PALM at $3.29/share
Gekko @ 10/25/2008 10:23:01 AM # Q

do you have confidence in colligan?


RE: PALM at $3.29/share
mikecane @ 10/25/2008 10:53:43 AM # Q
I had confidence in Colligan. Until he was put in charge. Probably a great booster and marketing guy. Device guy, no effing way.

The thing about an iPhone HD is ... how fekkin teeny weeny would type appear in Safari then? Go on, look at the NYT and have nothing but --- appearing as lines of text. You wouldn't know what the hell to tap on!

No, it won't be a higher-res screen in an iPhone. It'll be an iPod Air/iPod Touchbook with a larger hi-res screen. I got the timing all wrong. Something that big is a January MacWorld Event, not an October reveal.

RE: PALM at $3.29/share
mikecane @ 10/25/2008 10:54:52 AM # Q
^^^ those hyphens were intentional and not PIC censorware. Illustrative of how unreadable such wee type would be in full-screen mode.

RE: PALM at $3.29/share
Gekko @ 10/25/2008 11:51:33 AM # Q

mike - this is more your speed, old man -

http://www.youtube.com/watch?v=TNdw4CfbwQg



RE: PALM at $3.29/share
AdamaDBrown @ 10/25/2008 11:10:05 PM # Q
To be blunt, I wouldn't buy PALM at this point. If you're going to invest $3 grand in the market, you're better off with 500 shares of GM-which is reasonably expected to recover sooner or later-than Palm, which is 50/50 whether it ever pulls out of the tailspin. Whether or not they have cash isn't the relevant measure. It's their cash position versus the crushing debt they've got and the fact that they're not currently profitable. Saying that they're okay because they've got cash is a little like saying that the wrecked submarine is okay because it's still got some air in it. That's nice, sure, but what you really want to have is a plan to get MORE air, and Palm doesn't seem to have that down at the moment.

By the way, I call fake on that iPhone HD.

RE: PALM at $3.29/share
SeldomVisitor @ 10/26/2008 5:03:33 AM # Q
I'm not so sure about GM but GE looks like a real bargain.

[ob-disclosure - I own a massive 70 shares of GM and something like 500 of GE bought at just about their peak price so, though biased and possibly benefiting from others' purchases of these, I seriously doubt any cast of, say, 100,000 buyers will benefit me enough!]

RE: PALM at $3.29/share
Gekko @ 10/26/2008 8:46:27 PM # Q

UH, I SAID............

mike - this is more your speed, old man -

http://www.youtube.com/watch?v=TNdw4CfbwQg



RE: PALM at $3.29/share
mikecane @ 10/27/2008 6:05:32 AM # Q
I did see the video the first time, you eejit. Has your brain been turned to mush after all your weekend binge drinking?

RE: PALM at $1.55/share
Gekko @ 12/1/2008 2:51:22 PM # Q

well it's a good thing i didn't take that flyer at $3.29...i'd be down 50%+. nasty.

PALM
12-1-08
After Hours: 1.55 -0.33 / -17.55% Vol. 5,140



RE: PALM at $3.29/share
mikecane @ 12/1/2008 5:22:49 PM # Q
>>>i'd be down 50%+.

And thus Justice is cheated once again!

Reply to this comment

Rumor: An iPhone for Verizon in 2009

mikecane @ 10/24/2008 4:42:26 PM # Q
RE: Rumor: An iPhone for Verizon in 2009
rcartwright @ 10/25/2008 11:50:05 AM # Q
Mike,

I call bullshit on this. I suspect if they are talking at all, it to hold over ATT's head when the Apple/ATT distrobution contract is upo either in 2010 or 2012. Also, I can't see Verizon giving up the control that Apple demands. Verizon already has some iphone clones in the pipe and while Apple may want to expand to a new pool at some point once the ATT sales saturate, an easier play would be T-Moble another GSM carrier before haveing to re-engineer the phone as a CDMA phone. Why make the investment at this time in the teeth of a recession. Finally, Apple would have to have the phone recertified for CDMA with the FCC which will take time and coin.

"Many men stumble across the truth, but most manage to pick themselves up
and continue as if nothing had happened."
- Winston Churchill

RE: Rumor: An iPhone for Verizon in 2009
SeldomVisitor @ 10/25/2008 1:45:00 PM # Q
See today's Boy Genius Report http://www.boygeniusreport.com/ for all the Verizon iPhone clones you can stand...

RE: Rumor: An iPhone for Verizon in 2009
hkklife @ 10/25/2008 6:50:26 PM # Q
I call BS as well. Thanks for the tip, SV. I've been anticipating a flood of 'me too' iPhone-esque 320x480 (or better) phones on Verizon for quite some time. The Dare & BB Storm are just the tip of the iceberg. They'll really be flooding the market with 'em later this year and into next year. But I don't see a CDMA iPhone before Q2 2010 at the earliest.

http://www.boygeniusreport.com/2008/10/25/three-new-verizon-handsets-leaked-samsung-omnia-and-saga-htc-touch-pro/

I think the sweet spot of the market over the next year+ for the average consumer & carriers alike is going to be feature-laden, large touchscreen-enabled dumbphones, ala Dare/Instinct etc.


Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p

RE: Rumor: An iPhone for Verizon in 2009
abosco @ 10/26/2008 11:42:05 AM # Q
Verizon already has some iphone clones in the pipe...

I doubt anybody is switching to Verizon from AT&T to pick up an LG Dare. All the clones in the world aren't equivalent to the real thing. After Verizon's original blunder of denying Apple the ability of selling it on their network, I imagine they would be open to the idea of bringing the third iteration on their network.

If anything were to happen, it would be in 2010 at the earliest.

-Bosco
NX80v + Wifi + BT + S710a

RE: Rumor: An iPhone for Verizon in 2009 (NOT)
Rastick @ 10/26/2008 12:42:36 PM # Q
I have no inside knowledge here, but Apple's business model is low-cost products sold at high margin. They effectively have a single phone design with a much cost as possible squeezed out of it. Implementing a CDMA radio variant just for Verizon doesn't seem likely. If Verizon want to sell the iPhone, they need to switch to a GSM-3G network, which also doesn't seem likely.

There's not much overseas interest in CDMA, and CDMA carriers in Canada and Australia have already started to migrate to GSM, so why would Apple put any effort into implementing CDMA support?

RE: Rumor: An iPhone for Verizon in 2009
Gekko @ 10/26/2008 8:53:58 PM # Q

a VZW and a Sprint iPhone makes complete sense. it's a win-win for the carriers and for Apple. Apple has built up critical mass with AT&T, proved that the subsidy-contract model works. AT&T got the advantage of the first-to-market head start, and now VZW and Sprint would get to play too. Apple expands its market exponentially and VZW and Sprint attract/retain customers who would otherwise have defected due to iphone.

what's the problem? it's done...


Reply to this comment

why no Google love for PalmOS?

Gekko @ 10/26/2008 8:37:26 PM # Q
RE: why no Google love for PalmOS?
Rastick @ 10/26/2008 11:13:15 PM # Q
Java... gmail.prc needs Java and Palm stopped supplying the IBM Java runtime.

If you have access to the Java and the older version of gmail, it works fine!

RE: why no Google love for PalmOS?
Gekko @ 10/27/2008 5:49:01 AM # Q

of course, but - they could have still linked the Google Maps for PalmOS. or even created a Google Mail PalmOS app that would work.


RE: why no Google love for PalmOS?
mikecane @ 10/27/2008 6:07:07 AM # Q
Like anyone aside from the 20-25 people who visit PIC still know that PalmOS exists!

RE: why no Google love for PalmOS?
SeldomVisitor @ 10/27/2008 7:34:23 AM # Q
> Like anyone aside from the 20-25 people who visit PIC still
> know that PalmOS exists!

Speaking of $3 per share for Palm, you are pointing out a key problem for Palm - the "time value" of one's own reputation/brand - they're losing it.

RE: why no Google love for PalmOS?
mikecane @ 10/27/2008 4:43:54 PM # Q
In another post ($50 off), I asked Gekko if Palm stock will soon look like this:

http://tinyurl.com/55l8hl

Hey, Gekko, what was that stock worth before the bankruptcy?

RE: why no Google love for PalmOS?
Gekko @ 10/27/2008 5:08:54 PM # Q

LEH
52 Week High 67.73
52 Week Low 0.15



Reply to this comment

the obama crash

Gekko @ 10/28/2008 8:42:11 AM # Q

the stock market has dropped almost 50% from its highs. it has priced in an obama victory.

RE: the obama crash
SeldomVisitor @ 10/28/2008 9:34:03 AM # Q
Some of us believe an Obama victory is a result of the crash, not the cause of the crash.

In fact, a LOT of us out here believe it.

The Landslide for Change in a week - not just Presidential but right across the board with Congress/Senate as well - is going to be a wonder to behold.

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