TSC Ratings' Upgrades, Downgrades: Palm

Palm's revenue fell significantly faster than the industry average of 10.5%. Since the same quarter one year prior, revenue fell by 24%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. Palm's debt-to-equity ratio of 1.0 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.

Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.04 is sturdy. Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 59.7%, worse than the performance of the S&P 500. Consistent with the plunge in the stock price, the company's earnings per share are down 372.7% compared to the year-earlier quarter.

Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy. The gross profit margin for Palm is currently lower than what is desirable, coming in at 32.4%. It has decreased from the same quarter the previous year.

Along with this, the net profit margin of -9.30% is significantly below that of the industry average. Net operating cash flow has significantly decreased to -$8.53 million, or 110.2% when compared to the same quarter last year. In addition, when compared to the industry average, the firm's growth rate is much lower. Palm had been rated a sell since March 24, 2008.

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