Tuesday, September 05, 2006

Calls of Note Part 3

- Piper Jaffray notes that based on their monthly handset channel checks, they believe Palm (NASDAQ:PALM) Treo sales were solid at Verizon and Sprint during August. However, firm's
checks indicated weak Treo sales trends at Cingular due in part to the lack of new product introductions.

At Cingular,checks indicated Treo 650 sales remained weak due to continued stronger demand for the HTC 8125 and BlackBerry 8700. They also believe the Nokia E62 is on track to ramp in volume by October and should sell at a very competitive price. Firm was disappointed several Cingular stores that had expected a 700 version of the Treo by now were no longer certain of its launch date and hinted of a WCDMA version (Treo 750) by the end of the year. Firm believes as Cingular rolls out 3G services covering more markets nationwide, Palm must ship a 3G-enabled smartphone at Cingular to help drive sales. In fact, channels checks indicated Cingular will soon offer a new HTC 3G-enabled smartphone to replace the current strong selling 8125 model.

Overall, they believe Palm sales trends are tracking in line with August quarter proforma EPS of $0.19. However, due to increasing global competition, the firm slightly reduced their gross margin assumptions leading to lowering FY07 EPS estimate from $1.03 to $1.01 and FY08 estimate from $1.14 to $1.06. Tgt goes to $16 from $19.

Notablecalls: Expect to see some downside pressure in PALM in the coming days.

No comments: