Palm battered after revenue warning

Palm Inc. said yesterday that its revenue for its fiscal second quarter would reach the range of $190 million to $195 million, far below Thomson-Reuters estimates of $331 million.
The company’s stock plunged more than 12% to a new low this morning before stabilizing somewhat in midday trading. The stock has lost 80% of its value in the last three months, according to MarketWatch.
The decline in revenue resulted from sharply reduced demand for smartphones in particular and handsets in general, Palm said in a statement.
The company reports earnings for the quarter ended Nov. 28 on Dec. 18.
Analysts appeared to uniformly cut their ratings for Palm, with Global Crown Capital L.L.C. basing its own cut “on our expectations of a terrible February quarter, worries about liquidity in light of larger-than-expected losses and the complete lack of visibility into Palm’s revenue potential.”
“Palm was hit by the simultaneous collapse in demand and rapid deterioration in pricing,” according to Global Crown Capital analyst Pablo Perez-Fernandez.
Analysts are focusing on Palm’s “burn rate,” or the speed with which it is consuming its cash reserves as it readies a next-gen handset platform to replace its aging Treo line of smartphones.
Global Crown Capital speculated that Palm could see its private equity stake disappear and become the target of a takeover.