At Palm, a Hard Look at the Rebate Numbers

Some investors are wondering if Palm (PALM Quote) resorted to an accounting tactic to meet second-quarter earnings and sales targets.

Palm Pressing Stock down after early highs

Palm, under tremendous pressure to produce big sales gains and sustain its heady valuation, issued a second-quarter earnings report in December that beat Wall Street's expectations. But at least one analyst says the company succeeded in doing so only because of the method it used to account for a rebate on its IIIxe model. By booking the reduction in revenue from the rebate in the current quarter rather than when the product was shipped, Palm effectively delayed the rebate's revenue hit to a seasonally slower, less closely watched quarter, he says. ...