Are Palm (PALM) Shares Worthless?

Are Palm's shares worthless? According to Canaccord Adams analyst Peter Misek, Palm's shares are worthless. This is surprising for a company whose stock was the darling of Wall Street a few months ago. Shares were trading at north of $15 just this past year. Now Palm has dropped to under $5 per share.

Misek states, "With what appears to be roughly 12 months of cash on hand, an accelerating burn rate, a complete lack of earnings visibility, and substantial debt and preferred equity, we no longer see any value in the company's common equity." Misek is not alone in his assessment of Palm (PALM).

Kaufman Brothers analyst Shaw Wu notes that "while we believe Palm has some value with its webOS (phone operating software platform)...we are unsure of the company's prospects as an ongoing concern."

This is a bold call by Misek considering the substantial equity investment that Elevation Partners has made in Palm. Before Palm shares drop to zero, I believe that Palm would be a likely takeover target at $1 to $2 per share. Microsoft, Motorola or Nokia could gobble up the entire company at distressed levels.