Susquehanna Financial Group Maintains Palm (PALM) Neutral Rating

Susquehanna Financial Group analysts Jeffrey Fidacaro and Stanley Kovler maintained their Neutral rating for shares of Palm, Inc. (Nasdaq: PALM).

Although they rated the stock Neutral, much of the commentary regarding Palm, Inc. was negative.

The analysts said that Palm is facing growing channel inventory concerns and that the company has limited strategic options.

They also noted that liquidity was becoming a concern, with $500 million in cash on its books and a burn rate of $70 million per quarter, Palm will face liquidity issues within 6 to 7 quarters.

"Efforts to stimulate demand are escalating, signaling weak traction. At Verizon’s launch of the Pre and Pixi on January 25, pricing was $149.99 after a $100 mail-in rebate, and $99.99 after a $100 mail-in rebate, respectively, along with a BOGO promotion through February 14. Yet in early March, Verizon lowered the price of the Pixi to $79.99 and began offering instant rebates (instead of a mail-in that can potentially carry a low return rate). In our view, both changes signal that units are tracking well below plan. While it is unclear who is taking the brunt of the new price reductions, Palm could have lowered prices to carriers (Sprint is selling the Pixi at $49.99) as an indirect incentive as the carriers would maintain their subsidies and pass through the savings to the consumer."