RBC: Palm's Just a 'Hail Mary Play'

Palm (PALM) shares are modestly higher ahead of the company’s announcement after the close Tuesday of financial results for its fiscal second quarter ended November. Earlier this month, the company pre-announced that it expects revenue for the quarter of $345 million to $350 million.

Mike Abramsky, an analyst at RBC Capital, writes Tuesday that he expects the company to report in line with the guidance, with revenue of $347 million and a pro forma EPS loss of 9 cents a share.

Abramsky thinks third quarter guidance could beat Street expectations of $365 million and a loss of 3 cents; he expects the company to project a range of $365 million to $380 million in revenue, with a bottom line between a loss of 3 cents and break even.

Abramsky says that despite a compelling valuation, it is too early to call the turnaround in the stock. He says the company continues to face “deep challenges,” including execution issues, hardware reliability, an outdated product roadmap, no new OS for 12-18 months and poor morale. He says the stock remains “a Hail Mary play.”

Meanwhile, according to TheFlyOnTheWall.com, there was talk on CNBC Tuesday morning about the possibility that 27% holder Elevation Partners could decide to take Palm private. (I didn’t see it; did anyone else?)

Palm Tuesday is up 14 cents at $5.79.