Palm (PALM) is a stock that just about everybody had written off. Folks are currently in the process of reconsidering, and this could lead to a monster move in the stock.
Here's why:
1. Palm Pre is the real deal. It may not be a better piece of hardware overall than iPhone or Blackberry, but it doesn't need to be. It just needs to be competitive and gain a market-share niche.
Product reviews have been excellent. It effectively combines Apple’s (AAPL) touchscreen technology with a Research in Motion (RIMM)-type keypad. And Pre is competitive, in terms of features, with iPhone and Blackberry products (quality of camera, battery life, and so on).
2. Sprint’s (S) All-Everything Plan offers, by far, the best overall value in the market for 3G phone plans. This will sustain Pre sales going forward.
Good phone + cheap plan = big-time sales.
Based on its current market projection, I don't think Palm could be acquired for less than $45, which implies a valuation of around $6 billion. Indeed, the strategic implications for all of the aforementioned potential acquirers are huge, and it's quite possible that a bidding war could erupt. If that happens, it could boost the value of the stock considerably further.
Note to readers: This article was originally intended to be posted on Monday. I withheld publication after the stock spiked the very day I was going to submit the article. I'm now releasing it due to the fact that the current pullback may make the article more timely. However, please note that some of the data cited here on market capitalization, short interest, etc., may no longer be exact. I doubt that any of the data have changed significantly, but, as always, investors should always do their own research.
Author: James Kostohryz
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