Palm shares dive after sales shortfall raises doubts on turnaround

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Palm shares dive after sales shortfall

NEW YORK — Palm Inc. shares plunged Friday after the handheld device maker’s latest quarterly report raised questions about the its turnaround effort.

The company’s stock was down $1.52, or 26.9 percent, at $4.13 in afternoon trading. The stock earlier set a new year low of $4.08. Its previous bottom of $5.29 was set Wednesday.

Palm’s latest results showed tepid sales of its smart phones. The company shipped 960,000 devices during the fiscal quarter ended Feb. 26, but customers only bought 408,000.

That, in part, led to a revenue projection for this quarter that was less than half what analysts expected, according to Thomson Reuters estimates. Retailers will likely have to sell what they have before ordering more phones.

Given the shortfall, Barclays Capital analyst Amir Rozwadowski lowered his per-share estimate for the current fiscal year and reduced his share price target to $4.50 from $7. He left his rating on Palm shares at “Equal Weight.”

Palm’s smart phones, the Pre and the Pixi, face tough competition from Apple Inc.’s iPhone, Research in Motion Ltd.’s BlackBerrys and newer phones like Motorola Inc.’s Droid, based in Google Inc.’s Android mobile software.

In a client note, BMO Capital Markets analyst Tim Long said consumers seem to have little interest in Palm’s phones, making “a turn around look less and less possible.” He rates the company’s stock “Underperform.”