This effectively takes away any shot of an improved outlook by the independent ratings agency. It also removes the chance that Palm will escape highly speculative territory. The agency reaffirmed the “CCC+” rating, but the old ‘positive’ outlook is now negative. That in turn puts the stock on alert for potential downgrades of its corporate credit rankings.
“CCC+” is considered the first notch of highly speculative territory, and it was late in 2009 that the corporate credit ranking was raised due to its capital raise efforts and over the hopes for its new product lines.
There is one key issue that we have wondered about, and one which ‘could’ have a huge boost for Palm if it is even possible. We see Apple Inc. (NASDAQ: AAPL), Nokia Corp. (NYSE: NOK), Research-in-Motion (NASDAQ: RIMM) and every other smartphone and consumer electronics firms either suing others or being sued themselves for patent violations of intellectual property. Palm was the very first to have any real product on the market in the 1990’s for its Palm Pilot. Then after 2000, Palm was one of the first smartphones on the market with the touchscreen interface. Does Palm have a trump card in IP against the entire industry? Or did it not lock up its intellectual property?
Palm shares are up 1.2% at $6.24 today. Its low since the recent earnings warning was $5.81 while its high is $18.09.
JON C. OGG
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