Standard & Poor’s cuts outlook on Palm to ‘negative’ following disappointing revenue guidance

S&P cuts outlook on Palm on revenue shortfall

NEW YORK — Standard & Poor’s Ratings Services on Wednesday cut the corporate credit rating outlook on handset maker Palm Inc. to “negative” from “positive” on Wednesday, after the company said weak smart phone sales hurt revenue projections.

S&P also affirmed its “CCC+” corporate credit rating, which is seven notches into junk territory.

Last week, Palm sharply cut its revenue forecast, saying fewer customers are buying its revamped smart phones.

Its shares sank to an 11-month low.

Palm said it expects third-quarter revenue of $285 million to $310 million, or adjusted revenue between $300 million and $320 million.

Analysts surveyed by Thomson Reuters expected revenue of $424.9 million.

For the full year, the company said its revenue will be “well below” its previous forecast of $1.6 billion to $1.8 billion. Analysts had expected the company to bring in revenue of $1.60 billion.

Palm shares rose 13 cents to close at $6.27 on Wednesday, but dropped 5 cents to $6.22 in after-hours trading.