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Technology Stocks : PALM - The rebirth of Palm Inc. -- Ignore unavailable to you. Want to Upgrade?

To: fmikehugo who wrote (1916)	9/25/2000 8:48:04 PM
From: stockvalinvestor	Read Replies (1) \| Respond to of 6784

Article just out by Morningstar saying PALM too expensive!! In after hours trading PALM is down to 50.... Morningstar.com Despite Great Quarter, Palm's Shares Are Too Rich By Todd P. Bernier What Happened? Handheld device maker Palm (Nasdaq: PALM - news) once again flew past consensus estimates for the August quarter, posting earnings per share of $0.04 before noncash charges. First-quarter results, reported after Monday's close, included sales that soared 127% from a year ago. What It Means for Investors Palm's unit shipments were given a nice boost by the launch of the m100, an entry-level organizer. Despite being on store shelves for only one month of the quarter, this product accounted for roughly 10% of Palm's total volume. This causes us some concern, since rising sales of the less-expensive m100 caused the average selling price of a Palm organizer to fall nearly 8% from last quarter. The growing influence of the m100 in Palm's product line also contributed to an erosion in gross margin of 6 percentage points from a year ago, to 38%. Management warned that gross margin will probably end the year at around 35%. Management appears to be sacrificing short-term profits for a much grander future, one that positions Palm at the convergence of wireless portability and Internet access. On Monday, for example, the company signed a deal with Motorola (NYSE: MOT - news) to co- develop a smart phone that will use Palm's organizer software. Palm has signed many agreements like this, which will help to wean the company from organizer sales as its main source of revenue and give it more of a subscription revenue model. After doubling since June, Palm's shares are expensive; they currently trade hands at around 500 times this year's estimated earnings of $0.10 per share, and at roughly 15 times expected sales of $2 billion. The company has superb fundamentals, but we think investors are paying a lofty price for Palm shares. Todd P. Bernier can be reached at todd_bernier@morningstar.com. Visit www.morningstar.com daily for in-depth analysis of stocks, funds, and sectors in the news.

To: fmikehugo who wrote (1916)	9/25/2000 10:27:16 PM
From: David E. Taylor	Read Replies (2) \| Respond to of 6784

Mike: The quarters and FY's follow COMS, more or less. For the past three years, COMS Q1's have ended 8/31/97, 8/28/98, 8/27/99. PALM's Q3 ended 2/25/00, Q4 ended 6/2/00, and now Q1 ended 9/1/00. Maybe they want the extra day or two to get product out the door, but there's probably some other reason. Having Q2/Q3 split the holiday season isn't all that bad, since it dilutes the temptation to get a good December shoveled into the usual Q4, which ends 12/31 for most companies. David T.