Covert Stock Operations

The Palm Treo is getting some much deserved free exposure in Ridley Scott's upcoming new file, "A Good Year", co-starring with the Treo will be Russell Crowe.

http://biz.yahoo.com/ap/061109/treo_movie_role.html?.v=2

http://biz.yahoo.com/bw/061106/20061106006485.html?.v=1

Palm, Inc. today issued the following statement in response to a patent-infringement lawsuit filed against it by patent-holding company NTP Inc.

The NTP lawsuit claims that certain Palm products infringe seven NTP patents. All seven of the patents asserted are being re-examined by the U.S. Patent and Trademark Office (PTO) and have been rejected by the re-examiners as invalid. Palm also noted that the NTP patents disclose a pager-based email service that has nothing in common with the mobile-computing devices invented by Palm.

Palm has been in occasional contact with NTP concerning a license to these patents. When Palm last communicated with NTP many months ago, however, each of the patents already was the subject of re-examination proceedings by the PTO. Palm is disappointed that, after many months of silence and repeated rejections of NTP's claims by the PTO, NTP has chosen to sue on patents of doubtful validity.

Palm respects legitimate intellectual property rights, but will defend itself vigorously against the attempted misuse of the patent and judicial systems to extract monetary value for rights to patents that may ultimately have no value at all.

NTP, the same bunch that sued RIMM, has just leveled charges at Palm, that claim Palm is infringing upon NTP's patents.

It should be interesting to see if this suit carries any weight, as this Patent holder, almost shut down RIMM.

Microsoft code is involved in this suit. It will be interesting to see whether or not Microsoft will step in to aid Palm in defending the Microsoft directpush code.

This article points out something that has been overlooked by most press:
http://www.whatpc.co.uk/vnunet/news/2168060/blackberry-slayer-hits-palm

"The highest court [US Supreme Court] imposed restrictions on injunctions in patent cases. The new rules effectively prevents patent holding companies from using injunctions to bully manufacturers into purchasing a license on their technology."

http://www.streetinsider.com/Corporate+News/Standard+&+Poor's+Index+Changes:+LPX,+FIS,+PALM,+IVAC/1313372.html

This is huge. Quite a number of mutual funds track the S&P400 and will be forced to buy Palm shares. Combined with the stock repurchase program that Palm put in place, this will take approximately 24 million shares of Palm off the open market.

If I were a short, I'd be looking for cover right about now.

The next week of trading should be very interesting.

Edit: This press release was in error. Palm already is a member of the SP400.

Thanks to chinaski_71 who found this link, we have a little insight into why Palm has such great R&D.

Recently Palm also announced the planned opening of a third R&D facility in China, to work on low cost Smartphones.

The following distribution of Global Smartphone sales is taken from the a recent msmobiles.com interview with the Palm Product manager responsible for the recently launched Treo 750v: (Listen to the interview, it's very good)

10% USA
43% Europe
43% Asia
7% Other

Currently, Palm has approximately 40% of the US Market. That equates to ~4% of the Global Smartphone market. (0.40 x 0.10 = 0.04) In addition Palm currently hold approximately 4% of the European Smartphone market. This adds almost two most points to their global Smartphone market share. (0.04 x 0.43  = 0.0172)

If you just look at Europe and the US, Palm's global market share is 5.72%.

According to a recent Palm press release, they are aiming to take a 10% share of the European Smartphone market, within 12 months.  That equates to an additional 2.58% of the global market. ( 0.043 - 0.0172 = 0.0258). This growth in the European market brings us to a total of 8.3%

Let's think about this. Palm is telling us that they are aiming to increase their percentage share of the global smartphone market by 45% within twelve months. This completely excludes any growth in the USA, which is currently tracking double digit annual gains, with two new phones recently launched, and a third phone on it's way. This is definately NOT baked into the current stock price.

All I have to say is wow! We are really stuck looking at our belly buttons right now. (You've got to love those me too analysts.)

M E R R I L L L Y N C H Research Comment
Telecommunications/Wireless Equipment Reference Number 30224903
Sep/06/2006 00:48
Vivek Arya +1 212 449 2082

Telecom Equipment-Wireless: Smartphones: PALM could outperform RIMM near term;
Subject: Earnings Preview

o Palm more interesting than RIM in the near term

The next few weeks could see several new smartphone launches from RIM and Palm. Ahead of those launches and earnings reports, we position Palm as a relatively more interesting play near term compared to RIM, particularly given that both players are leveraged to the same growth driver (smartphones), yet Palm stock is up only 2% vs +31% for RIM and +9% for Nasdaq.

PALM: multiple new product cycles, attractive valuation, potential share buyback

We expect Palm to report an in-line August quarter on US strength offset by European weakness. However, November quarter outlook could positively surprise on the recent launch of Treo 700wx at Sprint and the upcoming launch of the Treo 750v at Vodafone Europe. Potential news flow around the upcoming low-priced Treo could also benefit sentiment. Finally, Palm's outsized cash
balance (~35% of current market cap) could prompt a meaningful share buyback, in our opinion. We reiterate our Buy rating and $19 price objective on Palm stock. While competition is increasing, we believe Palm stock, trading at <10x its forward PE ex-cash, well discounts the risks.

RIM: stock discounts most near term catalysts, although still the best longterm play in the smartphone space

We expect RIM to outperform August quarter consensus, with 8700 handset
strength at Cingular/T-Mobile and 7100 strength at Verizon, offset by
continued weakness at Sprint. We believe RIM could meet or exceed our 689K new
subscribers estimate which is at the midpt of RIM's outlook of 670-700K new
subs. We also expect strong guidance for the November quarter where we are 2c
above consensus on 742K new subs estimate. However, RIM stock appears to
mostly discount potential near term catalysts; the 8703 smartphone launch at
Verizon and the consumer (8100) handset launch at T-Mobile/Cingular.
Longer-term, however, RIM's integrated business model of handset + software +
service remains the most defensible way to play the high-growth smartphon

August Trends

-We are expecting an in-line August quarter from Palm, with strong sell though of the 700p Treo offset by continued sluggish sales of the 700w.

-Our sales and EPS estimates of $386mn/19c are mostly in-line with consensus at $383mn/19c.

November Quarter Outlook

-November tends to be Palm's strongest seasonal quarter, and we expect a robust outlook from management. Our November quarter sales and EPS (ex stock comp expense) estimates of 498mn/$.29 are mostly in-line with consensus of $197mn/$.30.

-We expect Palm to benefit from: 1) launch of the new 700wx Treo at Sprint; 2) upcoming launch of the 750v at Vodafone and Cingular; and 3) potential news/flow of a new low-priced Treo at Cingular. We think the low priced Treo is especially being neglected by the street although it can help Palm proactively segment the market with low-end functionality (comparable to Moto Q) and high-end functionality (touch screen etc.) available on its regular 700 series Treos. The low-end Treo could also help Palm migrate its shrinking PDA user base to higher functionality smartphones. Checks suggest that Inventec Appliance will be Palm's Taiwanese contract manufacturer for the low-end Treo (based on the Palm OS) which could be launched in next 1-2 months.

-As we wrote recently, Palm is underutilizing its considerable cash balance and the board should consider an aggressive share repurchase program, in our opinion. Palm stock is down 43% from its recent highs while the company holds over $5 in cash/share, or 35% of current market value. Even if we set aside about $200mn for working capital and $75mn for in-house operating system development, Palm still has at least $250mn in cash which could be used to buyback about 17% of its outstanding shares. Increasing leverage could support as larger buyback and could be sustained with Palm's strong and consistent cash flow generation ($119mn in free cash flow, up 22% YoY, in recent FY06).

-Another critical, albeit more modest (<$100mn), use of cash could be for Palm to develop its own next-gen operating system (OS) for the consumer-focused Treo smartphone. We believe its relationship with its current OS vendor, Access, is not fruitful and has led to delays that could impact Palm's long-term competitiveness. If, like Apple, Palm intends to differentiate through software and ease of use, ownership of its OS is crucial, in our opinion. (Note that Palm's OS relationship with Microsoft is focused on the separate enterprise segment of the smartphone market.).

http://www.forbes.com/2006/09/05/palm-sprint-0905markets17.html?partner=yahootix

Read more about it here: http://www.palm.com/us/products/smartphones/treo700w/index.html?creativeID=HmPg_BB|treo700wx_sprint

Keep in mind we still have the September 12th Vodaphone launch upcoming, and September 21st earnings. I will soon be publishing my earnings preview, stay tuned. (I'll give you a hint: weak Q1, with very strong Q2 guidance.)

Now on to other topics. I think I have found an undiscovered small cap tech gem. I still need to do my DD (due dillegence), but I can tell you the following:

1) Marquee Fortune 500 customer list (GE, T-Mobile, British Telecom, EDS, JP Morgan, Wachovia, DOD, US Army, Bell South, Time Warner Cable, to name just a few)
2) Relatively low analyst coverage
3) Market leader in a rapidly growing space
4) Software and Software services, leads to very high margins
5) On the verge of profitability

I'll give you all a hint. This company's fortunes rest in managing the ever growing complexities of Enterprise storage, networks, servers, and virtualization. (Stay tuned).

What else, summer is finally over! Let the wicked trading of September begin!!

Finally after many months of waiting, Palm pulls it off. You can now connect your Treo to a Blackberry Enterprise Server. http://www.treocentral.com/content/Stories/892-1.htm

P.S. - I really need to review the different Mobile blogging clients available for the Treo, as I am on vacation this week, and had to wait till I got back to the cabin to post this news.

Another new market to sell Treos in!!

http://biz.yahoo.com/bw/060829/20060829005178.html?.v=1

Lot's of pictures, and specifications in the enclosed link

Pictures here:












Most important though is the specifications. This device will have twice the available memory as the Verizon 700w, and will be called the Treo 700wx. (I'm guessing x is for expanded.)

Combine this launch with the Vodaphone launch on September 12th and we are looking at a very good month for Palm!

Engadget reports that Marvell has introduced it's first single chip Bluetooth/WiFi chipset. (Press release)This would drastically reduce the power consumption requirements of adding WiFi support to a design that currently encorporates Blue Tooth.. Might this be the missing technology piece that Palm has been waiting for to introduce a WiFi enabled Treo?

If this is true, I'd expect that their upcoming Windows Mobile Treos might be the first to receive this significant upgrade.

P.S. - Marvell currently produces the X-Scale processor that currently powers all Treos.

Read about it here. Have a good weekend... It will be nice to see Palm rally into Labor Day weekend.

Ms-mobiles.com has a nice writeup on the failure of the Motorola Q to launch Windows Mobile into prime time. They say it now falls on Palm's upcoming 750v Vodaphone specific phone, to break into the market. Read more about it here

"Clearly Motorola Q is becoming a failure and upcoming Motorola Q for UMTS/GSM (to be launched in year 2007 - clearly Motorola is destined to miss 2006 Christmas shopping period) will not help if these problems will not be resolved. Motorola is releasing soon HSDPA version of its Motorola RAZR regular phone and it looks like Moto Q will share destiny with other failed products of Motorola like StarTac phones. Next stop in smartphone area for Motorola, that previously practically dumped Symbian, will be: mobile Linux. Once again (after Motorola MPx debacle) Windows Mobile powered Motorolas appear to be a total failure."

We are starting to see a three way war, in Enterprise mobile push email delivery, building between Research in Motion, Microsoft, and GoodLink. Nokia is also vying for a piece of the action through their acquisiton of Intellisync. (Which powers Verizon Wireless's "Wireless Sync" client for Treos.)

Palm has managed to perfectly position themselves such that they are, or soon will be, the device patform of choice for all three providers. With the Treos now working directly with Microsoft's Directsync mobile push technology, Treos are Microsoft's primary weapon in their war to unseat Research in Motion as the current provider of choice.

Goodlink as you may know has clients that run on every Treo that is sold today. The 650, 700w, and 700p are all Goodlink enabled devices, and currently are the most widely deployed Goodlink platform devices. With the soon to be launched 700wx, 750v, 750w, and 680p Treos, we are looking at a huge potential base of platforms for Good to deploy their clients.

Because of Microsoft's moves, and Goodlink's Enterprise traction, Research in Motion was left with no choice but to develop a client for the Treos. This, soon to be launched client, Blackberry Connect, wlll cement Palm's place in the Enterprise space.

Once Research in Motion finally releases the Blackberry Connect client for all Treos, it will become clear to all, that Palm and their Treos are here to stay. When this happens, we should see many Enterprises who have been sitting on the sidelines, testing new devices and platforms, jump to the Treo. This news should also merit, at least, a few analyst upgrades.

Personally I feel that if Wall Street understood this, and understood this company's strategy and execution, Palm would be trading at a price north of $35/share, versus today's $14/share.

Palm Treo featured in a new movie called Snakes on Plane. Details here.

Bob Russell, of mobileread.com gives a nice writeup here about why we shouldn't discount Palm's potential.

His basic story is that even though Palm has had a rough battle to remain relevant, they have made the tough decisions necessary to achieve greatness, and survive in the face of severe diversity.

Check it out and let me know what you think:

http://www.engadgetmobile.com/2006/08/10/beefed-up-treo-700w-for-sprint-on-september-3/

Currently the Treo is the only full functional laptop replacement device on the market. What do you think all those business travelers are going to do now that they can't carry laptops on flights?

That's right, they are gonna buy Treos. This is a most unexpected gift to Palm shareholders!!

http://www.reghardware.co.uk/2006/07/20/palm_3g_treo_september_debut/

And this article that shows the first official picture of the Vodaphone Treo:

http://msmobiles.com/news.php/5421.html

If you listen to today's Palm Investor conference call, in the response to analyst questions, CFO Andy Brown comments on Palm's suppliers, saying:

"We are in the process of diversifying that ODM base. For a couple of reasons. One, the obvious reason is that HTC is becoming more of a competitor. But, probably as big a reason, is the fact that we are now at a critical mass from a volume standpoint that, in fact, we can now start using multiple ODMs for our products, and that gives us the advantage of having these guys compete with each other for platforms. To date that has not occured. It's been principally, at least for the past two years, HTC. So, we think, it clearly should give us some additional cost synergies because of that competition."

This confirms that it was in actuality HTC who won the bidding to be the 700p platform ODM.

So in other words the following rumor is basically a complete fabrication, by offshore hedge funds, designed to get you to sell your shares at a cheap price:

http://www.digitimes.com/telecom/a20060803A9049.html

P.S. - Also, if you reboot the 700p with the Hotsync button depressed you will see that the ROM boot loader comes up is the familiar rainbow HTC bootloader. Well it's probably only  familiar if you are a Treo hacker, and have used the ROMTOOL to update the firmware on your Treo 650. (Which is also manufactured by HTC).
P.S.S. - Don't take my word for it. Listen to the webcast archive here: http://wsw.com/webcast/pc4/palm/

Here's a quick blurb from Barron's Online:

http://blogs.barrons.com/techtraderdaily/2006/08/02/palm-merril-says-buy-sees-strong-product-cycle-takeover-candidate/

“With four new Treo product cycles, we feel Palm can maintain a lead in the smartphone marketthat Gartner projects to grow at a 72% CAGR through 2009,” Arya writes. “We also see Palm as an attractive acquisition target for PC vendors looking to diversify into mobile handsets. Our $19 DCF [discounted cash flow]-derived price objective ([equivalent] to 12x forward P/E ex cash) shows theoretical upside to $25 on an EV/EBIT basis vs. comps.”

If you are an investor, current prices are a great entry point, but I think you need to be prepared for at least $0.90 downside from today's close. The upside will take AT LEAST two quarters to fully reveal itself, but we are looking at a double from today's close. ($29)

Fast money will run it up quickly once people stop buying short term calls, and retail stops speculating and hoping for a fast recovery. This hasn't happened yet. If they run it up it is to get speculative interest back into the stock, and will crash it again, once the boat is loaded with retail investors, that are unaware of their tactics.

One potential loose cannon that could screw up my prediction is the August 7th and 9th investor conferences. Not sure how much Palm is willing to reveal at this time. They could potentially bring in a new wave of institutional money, IF they are convincing enough. (Or if there is a speculative runup in share price prior to these conferences, the stock could crash post conference).

My eyes are now open to some of the inner workings of the Nasdaq and options markets, I couldn't believe how many people are making a living fleecing retail "shorts" and "investors". I know the crooks tell themselves "that they are just "market participants", and that the losers are also market participants, that are, or should be, fully aware of the risks involved in the stock and options markets." It's a load of self-soothing bullshit. Crooks are crooks.

Invest with a 5 year horizon. Ignore the trader's. They know how to scare shorts and longs alike. Let them battle it out with each other.

We know they are releasing 4 Treos this year.

1) 700w (released)
2) 700p (released)
3) 750v/w
4) 750p

They have discussed a third fledgling business. What could this be? I have my own theories, but I am going to keep them to myself for now.

From the recent annual report, it is unclear what OS next generation non Windows Mobile based Treo devices will be running. It has been pretty clear to those who have been paying attention for the past 6-12 months, that Palm is developing their own operating system that will replace Palm OS 5.

One thing most people don't realize, is that Palm OS 5 has a preemptive multitasking kernel buried deep within it's bowels. It would be a relatively simple operation to replace that kernel with a Linux kernel. After doing so, building an application framework is only a matter of time. Palm is in no super rush to do so, because their current Treos are being received well in the market place.

I suspect Palm is currently negotiating with PalmSource for for a perpetual license to the PalmOS. (Similar to Sun's license to System V Unix).

This would give them full control over their own OS, and allow them to expand into developer tools, compilers, and the whole ecosystem that surrounds the Treo.

Press release: http://www.wirelessdevnet.com/news/2006/jul/20/news6.html

I've added Stanley Works added to the verified Treo customer list that I am maintaining: http://stockoperator.livejournal.com/22889.html

http://www.brighthand.com/default.asp?newsID=12324

"Around the beginning of this year, Palm's CEO revealed that his company is going to release four new models in its Treo line of smartphones during 2006. So far, Palm has released two of these -- the Treo 700w and 700p -- and people are eagerly awaiting the next two.

Not surprisingly, rumors about these models are coming fast and quick.

The latest of these comes from CoolSmartPhone.com, which claims that at least one of these upcoming smartphones will be part of a new Treo 750 series."

I've been speculating that the Treo 750 model name will be sported by the new Treos for months now. Looks like I was dead on!!

http://www.pcworld.com/reviews/article/0,aid,126492,00.asp

"The Treo 700p replaces its predecessor, the Treo 650, atop the chart. Despite a steep price ($650 with a two-year contract from Sprint) and unimpressive battery performance, the 700p wowed us with its thoughtful design and lightning-fast speed. Like the Windows Mobile-based Treo 700w (number four on our chart), the 700p includes support for high-speed EvDO networks, which makes surfing the Web using its Blazer Web browser a real pleasure. The unit also features a speedy 312-MHz Intel XScale processor and 128MB of total on-board memory, making the device feel noticeably faster than the 650 at most tasks. But, as noted, the 700p offers mediocre battery life: It lasted just under 5 hours in our battery tests."

For a number of reasons, PALM is resuming it's multi-year uptrend today. (Hedge funds have covered and there is going to be a big announcement from RIMM regarding the Treo any day now).

Today's Bear Stearns upgrade leads me to believe the mutual funds, market makers and hedge funds that have been acting in collusion to drive the stock price down have pretty much finished up their work, and are ready to let this baby run.

Expect more upgrades after the RIMM announcement.

(This means that Palm has bottomed out. An entry at this point has nowhere to go but up)

Not much more to say...

Right now Palm is gearing up for a big GSM launch. Check out there recent job postings: http://www.maxhire.net/clients/mh160/index.html

One of the reason's that Palm is going to have lower earnings for Q1 is that they are hiring like mad.

Palm is the growth stock of the next decade, and currently has growth rates surpassing those of RIMM's.

Check out this Blog entry regarding Palm's product placement of Treos in Hip Hop videos: http://www.tunjiafonja.com/tunjis_weblog/2006/06/treo_getting_fr.html

Interesting stuff. Talk about under the radar buzz.

Longs, you did very well this week. You held onto your shares, and didn't day-trade. But let's not pat ourselves on the back just yet. The toughest times are yet to come.

Think back to the time, when I was bashing the stock all day and night. Any little down tick had me posting a doom and gloom comment. I made sure no longs could get in a word edgewise. I made sure every other post was negative. I made it seem like the shorts were in control. I made it seem like the end of the world. I made it seem like inflation and recession were both coming. Remember that feeling. Be prepared for it, it is coming again this next week. It may not be Monday, or it might. It may not be Tuesday, or it might. There is good chance they will try on Thursday. They may even try again on Friday. (After the Earnings pop)

2 weeks ago, I gave you all a taste of what that experience is like, in order to prepare you for the week to come.

The real thing will be worse than I could ever do. I don't have $300 million dollars at stake. I don't have the kind of backend connections to use naked shorting. I don't know the market makers. I don't have enough money to temporarily move the stock price by myself.

These shorts need to shake loose 2 million shares of PALM by the close of trading on Friday of next week. We need to be prepared for all possibilites. They will try to distract you from the great earnings and guidance. They will try to distract you from the US release of Blackberry connect for Treos. They will try to distract you from the upcoming Vodaphone Treo 750w release. They will try to distract you from the upcoming Treo 750w release on Cingular. They will try to distract you from the upcoming release of the Treo 700w on Sprint. They will try and make it seem like the market is tanking and that PALM must tank also. PALM can rally in the face of strong headwinds, but the shorts wil make it seem like it can't.

They will pull out all stops to attempt to get your shares.

I suggest you read the "Paid basher's Manual": http://www.novakcapital.com/bashers.htm They will use any trick in this book to get you to sell your shares. Be on the lookout for their tricks. Counter them. Keep posting why you like PALM. Post about the number of Treos you've seen. avoid engaging the paid bashers. If it's quiet and there are some good long posts, don't post.

Keep focused on the mantra. Do not day-trade. Also, hang onto your position. Don't let them get your shares at any cost. (I know we will want to take some profits off the table if we are successful. Try not to, until the stock hits $32+. I know we will get scared if the stock pulls back to $16. Remember, if none of us sell, we win.

The shorts we scared off this week were the small fry. There are some big nasty beasts out there. Beasts with hundreds of millions of dollars at stake. They are very angry, and a bit scared. They had hoped to drive the price of the stock down this week and buy your shares. Shorts look for stop losses, margin calls, and/or scared selling to cover. They want to buy your shares on the cheap. They will try at least one more time.

They will attack on multiple fronts:
1) The yahoo message boards.
2) They may have another analyst or two in their pocket
3) They will attack you in the market. (Attempting to cause wild fluctuations in the share price)
4) They will use your own fear against you. (Don't take profits until after we've rallied to $32+, or we get bought out. Make sure you are in a position to sustain price volatility. We absolutely mustn't see stop losses kick in or margin calls.)

Keep firm in your conviction that they cannot shake you. You have your shares. They need them. Don't let them have them. The rewards will be beyond what you can imagine.

Above all don't daytrade in this coming week. They need volume to play some of their tricks. Make them pull out their big guns. Make them use illegal tactics, like naked shorting. People have been informed. People are watching.

That said, have a good weekend, and rest. You will need your strength for the coming week.

I'm talking 10-20% over street consensus!!

Guidance.. don't even get me started:

Take into consideration in FY2007 so far we have:
1) Launched the 650 in 7 new markets
2) Launched Blackberry connect in at multiple markets
3) Launched the 700p on Sprint
4) Launched the 700p on Verizon
5) 8000+ GoodLink customers indicate huge velocity of Enterprise Treo conversions!

What's coming:
1) 75Ow coming to Vodaphone
2) 750w coming to Cingulat
3) 700w coming to Sprint
4) New Palmos Treos coming
5) New Linux Treos in the works
6) Blackberry connect US launch!!

and to top it all off we are looking at a buyout from RIMM very soon!!

Remember Analyst upgrades always follow a blowout conference call, hold on for the coming wave of upgrades

Last weeks piece about a merger between RIMM and PALM on June 29th made the blog circuit.

Check out the original article: and chime in: http://stockoperator.livejournal.com/23376.html

Now on to todays blog. PALM IS GOING TO RELEASE A NEW TREO NEXT MONTH!

A lot of little pieces lead me to believe that there will be a European Treo750w launch with Vodaphone next month:

1) The following blog entry indicates a July release.

http://www.pikesoft.com/blog/index.php?itemid=67

2) This Bloomberg article:

http://messages.finance.yahoo.com/Business_&_Finance/Investments/Sectors/Technology/Computer_Hardware/threadview?bn=13738&tid=244664&mid=244664

3) The December 10th New York Times article indicates that the CEO Ed Colligan has his
hands on a working prototype:

http://www.nytimes.com/2005/12/10/business/10extended.html?ei=5070&en=3458772f952c19f3&ex=1151121600&adxnnl=1&adxnnlx=1151022428-6mrxcW7J9n1EX0TUJoVqyQ

"Everything from looking up the meaning of words, booking a table at OpenTable.com, to doing a Google search on my family history in Ireland as I'm driving through the Irish coast when we're opening our center over there." (Ireland is 3G GSM)

4) Photos generally leak about three months before a product is launched

http://www.palminfocenter.com/news/8537/treo-hollywood-images-leaked/

http://www.brighthand.com/default.asp?newsID=12169

5) Microsoft VP of Mobile interview.

http://www.smartphonethoughts.com/articles.php?action=expand,11312

"John: And that's improving. That's improving. Ultimately, every single one of our devices, I could pick it up and say, wow, I love that. There are some things that I love about the Treo – the GSM version that comes out later this year, that will probably be my favourite device. "

6) And finally the smoking gun. Buried in a slew of SEC filings.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=4443354&Type=HTML

"The launch of the Hollywood in CY3Q06 - this antenna-less, 3G, Windows-powered smartphone will allow PALM to significantly grow its unit shipments by finally offering a compelling European phone."

Folks CY3Q06=FY1Q07 That is Palm's current quarter! (June, July and August)

(By the way it is illegal to submit fraudulant information in an SEC filing. So we know its coming next month)

7) August is Europe's vacation month, Palm will want to get a jump on the competition, by launching before the European Travel season begins. (Those lucky few who manage to get their hand's on a 750w will be able to show off to their friends and family, that they have the ultimate status symbol!).

All the little pieces added together give great credence to a July launch in Europe with Vodaphone. (I suspect, that DT will also get the device, in markets that Vodaphone is not launching in).

Am I missing something? Weigh in in the comments section below!

I have heard three arguments against this merger.

1) The merger won't pass antitrust review. (Hart-Scott-Redino)

This is an ineffective argument. There is clearly plenty of competition in the cell phone/pda space, with the Motorola Q, HTC apache, HP ipaq, Dell axiom, and Nokia getting ready to throw it's hat into the ring with the E61 communicator. If Dell can buy Alienware, RIMM can buy PALM.

2) Palm is doing too well to consider acquisition by RIMM.

If this is the case then PALM had better put up with GREAT earnings and GUIDANCE this Thursday. Either way PALM is a buy.

3) Palm management wants to remain independent.

Keep in mind every company has it's price. It is Palm management's duty to find the best shareholder value. If RIMM is desperate enough (as I think they are), a merger is definitely coming.

Let's please continue the discussion in the comments section, because as far as I can figure there aren't many reasons for this not to happen.

-stockop

Why PALM would choose RIMM:
---------------------------
1) Management has indicated that they would prefer not to be bought out by a huge conglomerate, as to keep the entrepreneurial spirit alive, and keep their development teams from having to deal with bureaucratic red tape.
2) Reward employees
3) Quickly reward patient shareholders
4) RIMM has a great legal department. (They have lobbyists in DC also)
5) RIMM has a great investor relations dept.
6) They would be able to maintain their management structure. (Merger of equals)
7) PALM is starting to launch their own network services business. All those RIMM data-centers will come in handy.
8) Access to a great worldwide sales force, and distribution network
9) Remove a competitor
10) Acceleration of market dominance
11) I know this can't really be a reason, but might PALM management want to teach the shorts, who have been messing with their stock, a lesson?

Reasons for RIMM to buy PALM:
-----------------------------
RIMM needs PALM desperately. PALM Treos are replacing Blackberries in the Enterprise. WIth many more coinciding deployments.

RIMMs problems:
---------------
1) Treo sales are about to pass Blackberry sales.
2) Microsoft's primary tool against RIMM is the Windows Mobile Treos. (The 700w, and the soon to be launched 750w)
3) Blackberry doesn't have Documents to Go
4) Blackberry doesn't function as a laptop replacement device
5) Blackberry doesn't have much multimedia capabilities to speak of
6) Blackberry had to swallow their pride and release a Blackberry client for the Treo
7) Blackberry sales growth is slowing to a halt, the stock price can't sustain for to much longer.
8) Blackberry doesn't have nearly as much 3rd party application support as Windows Mobile or PalmOS.
9) Blackberry doesn't have anything to counter the Motorola Q. The Treo 700p has overwhelming been reviwed as superior to the Motorola Q.

Based on this, RIMM needs PALM desperately, as it would solve all of their problems. PALM knows this, and despite their desire to remain independant, will be forced to take an "offer that can't be refused".

Check out these links, for proof RIMM and PALM are already working together. http://www.webwire.com/ViewPressRel.asp?SESSIONID=&aId=14748 and http://www.blackberry.com/ap/products/connect/treo650.shtml

I can only imagine that RIMM must be looking at sales figures for these Blackberry-Treos and seeing the writing on the wall for their hardware business.

A few strings to merger:
------------------------
1) PALM will insist on a merger of equals. (This would neccesitate a 2 PALM shares for 1 RIMM share swap + cash)
2) PALM will take the CEO stop.
3) Jim Balsillie has to go. He will be given a very nice package. The legal department isn't responsible for the NTP fiasco. Jim Balsillie is. He ignored good legal advice and almost got the company into bankruptcy. (RIMM's and PALM's boards are calling the shots now.)
4) The new company will be trading on the NASDAQ, under the symbol (PALM).

The 80+% of PALM that is held by instituations have been pressuring PALM to take a buyout. A buyout is in the works. RIMM is the most likely candidate, as they need PALM to survive.

RIMM scheduled their quarterly conference call to coincide with PALM's. I have a strong feeling that a joint announcement of this merger, is the real reason behind this apparent scheduling snafu.

And to add fuel to the speculative fire. Both companies had their CFOs at the Piper Jaffray 8th Annual Hardware & Communications Conference on May 11th. Could it be that they had some final numbers to work out?

RIMM: http://biz.yahoo.com/ccn/060502/200605020324950001.html?.v=1
PALM: http://www.unstrung.com/quote.asp?ID=3333125&Account=unstrung&Page=NewsRead

I am starting a list, based on my best judgement. (If you feel that I singled you out unfairly, feel free to send me an email at stockoperator@livejournal.com)

Palm board:
----------
1) sircumstemalot
1) option_kingtradersback1
1) shorties_rule_the_street
1) digitamoney
1) charger7534
1) gecco007
1) wht12123
1) UNITEDR
1) rndyjensen
1) magiv_hegyoni
2) mlrug
3) option_kingtradersback1
4) hangeem
5) trutheseeker7483
6) creephhi
7) kelvinwli
8) very_viking
9) duckjibe01
10) huhwhatup
11) ms_duh_meaner
12) Alaind4no
13) olicamaro
14) rapp_star_kleenex
15) slamssomuch
16) Derrick904
17) slumberparty_road68
18) fuamatoo_maafala
19) zaguluk
20) stupid_trader
21) follow_or_swallow
22) hesterfester2001
23) mono_browman
24) uttam_best
25) itshard_in_here_forabaggy
26) thesleazydoctor
27) cjaynewyork
28) cpaisajoke
29) whypayanymore
30) ivehadtracilords

P.S. - Check out this post: http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=1600640725&tid=palm&sid=1600640725&mid=249904

1) General Electric
2) Wal-Mart
3) Starbucks
4) Microsoft
5) Cisco
6) Fannie Mae
7) EMC
8) Netapp
9) Symantec/Veritas
10) Primerica
11) KPMG
12) Sun Microsystems
13) VeriSign
14) Time Warner
15) Thomson S.A.
16) Medtronic
17) Opsware
18) Allen Boone Humphries Robinson
19) Humane Society
20) FoxHollow Technologies
21) Ariba
22) CHRISTUS Spohn Health System
23) Columbus Children's Hospital
24) MedStar Health
25) Good Samaritan Society
26) Ohio State University Medical Center
27) PHT Corporation
28) Silicon graphics
29) Edward Jones
30) Broadlane
31) BancTec
32) Silicon Valley Bank
33) Deloitte Services
34) Stanley Works (UK)
35) SanDisk

The list has gotten long enough that I've decide to stop numbering them:

Cantor Fitzgerald
Morgan Stanley
Coldwell Banker
Century 21
Good Year
UPS
Volvo
Unum Provident
Countrywide Home Loans
Smithsonian National Museum
Blue Cross and Blue Shield
Wharton School of Business
Ariba
McKesson
Aramark
Stanford University
Burger King
Schwan's
The State of Alaska
Impact RX
Expedia
The United States Geological Survey
Harvard Medical School
A.G. Edwards
Standand and Poors (S&P)
ESPN (Disney)
Condi Naste (Advance Publications)

Please comment on this post if I missed any, and I will add them to the list.

I'd like to thank you all for your support and understanding. I will continue to do my best to dig up information on PALM, and provide commentary and analysis.

My initial plan was to wait until after earnings to tell everyone what I was up to. When I realised what was going on I had to let you all know, particularly since it seemed the BlackBerry connect news was not priced into the stock. (I did tell those that were uncertain and emailed me, what I was up to).

Motorola Qs are being returned:
-----------------------------
In other news, early adopters are returning Qs and going back to their Treos. (They claim that they are going to wait for Windows Mobile 5.1 before trying the Q again. The reason they give is that their hands hurt from having to scroll through everything and having to navigate multilevel menus with a scroll wheel. In addition, web browsing without a touchscreen seems to be a nightmare.) ;)

This bodes well for the Treo's continued gains in the Enterprise and Prosumer/Early adopter segments.

Land Buyer confirmed:
---------------------
Anyway, in case anyone missed it, Palm has a committed buyer for their 36 acre campus. This will add $70,000,000 to their cash holdings. That is approximately $0.68 per share. There is a good chance this could close much earlier than Palm's expected worst case Aug. 1st closing date. (Rising interest rates, mean that buyers will want to lock in ASAP)

However this goes, PALM has the buyer's $300,000 deposit, which is now non-refundable.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?FilingID=4185551&Type=HTML

Item 1.01 Entry into a Material Definitive Agreement
On February 2, 2006 (the “Effective Date”), Palm, Inc., a Delaware corporation (the “Company”), entered into a Purchase and Sale Agreement (the “Agreement”) with Hunter/Storm, LLC, a California limited liability company (the “Buyer”), pursuant to which the Company will sell approximately 36.6 acres of land located in San Jose, California to the Buyer for a total purchase price of $70,000,000 (the “Purchase Price”). The Buyer will deliver a $100,000 refundable deposit to an escrow holder and will have 60 days following the Effective Date within which to complete due diligence. The Buyer may elect to terminate the Agreement at any time within such 60 day period and the initial deposit will be refunded to the Buyer. Following the initial due diligence period, if the Buyer elects to proceed with the purchase of the property, the Buyer will deliver an additional $200,000 deposit. Under certain circumstances and upon payment of the additional deposit, the Buyer may extend the due diligence period, during which period the Buyer may terminate the Agreement. However, upon the payment of the additional deposit, the entire deposit will become non-refundable, subject to certain other circumstances. At the closing date, the deposit will be applied to the Purchase Price. Subject to the satisfaction of certain closing conditions, the sale is expected to close no later than August 1, 2006.

RIMM and PALM to merge?:
------------------------
Someone asked me a question about yesterday's post. "What indications do you have regarding a RIMM/PALM hookup?" I have no special information, this is strictly an intuitive leap on my part. Here is my reasoning.
1) Treo sales are decimating Blackberry subscriber adds
2) RIMM is desperate to hang onto their leadership position
3) PALM is relatively inexpensive right now. (This won't last)
4) Blackberry sales did not accelerate after the NTP lawsuit settlement.
5) RIMM and PALM are having their earnings calls at the same time
6) RIMM and PALM have been working together very closely to get BlackBerry Connect for Treo out the door.

Now you might ask, "Why would PALM sell out at these prices?". My answer is they wouldn't. RIMM is desperate, and will do what it takes to survive. In my opinion that would include doing everything in their power to acquire PALM, before it is "too late". RIMM has a small window of opportunity to grab PALM, before they become the next great thing. It will require RIMM to pay upwards of $5 billion dollars for this company.

Let's see how it goes.. (My investment thesis does not at all factor in a RIMM buyout. It would just be an early opportunity for shrewd investors.)

For the sake of those who follow my postings on Yahoo, I want to let you know that I was never short on this stock. I have held it though the past few months.

Alaind4no initially convinced me that by posting negatively, it would throw off contrarian indicators and help the stock price. I figured what the hell, it won't have any effect. At this point, I have realized what has been going on; hedge funds have been accumulating July calls for the past few weeks, and covering their short positions.

I was being used to setup a short squeeze, by helping the funds keep a lid on the stock price, so they could finish their accumulation, leaving the short position in the hands of non-professional traders. (Who better than me, a "respected" permabull, to throw the board into chaos). (Well, a formerly "respected" permabull) As an aside, to the best of my knowledge, Alaind4no is a professional stock poster for a trading firm.

When I realized what was going on, I also realized that continuing to do this bashing, is probably in my best financial interest, as I continue to have a very large long position in Palm. By coming clean now, and sharing my realization, I hope you'll get back on board, if you sold based on my very rude posts.

With the following pieces of news imminent, this stock is on the verge of a starting a sustained rally to a new annual high.. If I continue on my current path of bashing the stock, investors whose respect I think I had earned, are looking at a real missed opportunity, and amateur shorts are going to take a huge beating, with the potential for a real short squeeze likely. (All to the benefit of the hedge funds who hammered the stock price down to it's recent lows)

1) US launch of BlackBerry connect for the Treo is coming, most likely, this week. (If not this week next week for sure). I have confirmed this from two independant sources.
2) Great earnings coming (0.25-0.30)
3) Great guidance coming (FY2007 Guidance will be increased by 25% or more)
4) Launch of European Treo coming next month, in 5 major markets. (Vodaphone for sure, and possibly Deutche Telecom as well)
5) Large potential for a RIMM/PALM marriage.. If this is going to happen it will happen within the next couple of weeks. Most likely to be announced during the 4th Quarter earnings calls. (Both earning calls happen to be at the same time on June 29th.)

P.S. - I had left many clues about what I was up to, but in hindsight, I realise they were way to subtle for most casual readers.

I will be posting a full review later, but my initial verdict is that Treo fans are gonna love this baby. (I do)..

Also for new users, palm has really made remarkable strides in improving the "out of box experience".

First impressions:
1) EVDO coupled with PalmOS rocks!
2) EVDO coupled with PalmOS rocks!
3) EVDO coupled with PalmOS rocks!
4) Nice little tweaks to the GUI. (The reminder icon is now a little blinking golden bell, vs a blinking asterix. This isn't that big a deal in the grand scheme of things, but it shows that Palm is making an effort to make things more intuitive for the new user).
5) Similar GUI tweaks to the PIM apps. (Notably the today screen in Calendar has some nice graphical improvements.
6) Internet radio rocks with EVDO. I am currentlt listening to 192kb MP3 streams, with the builtin PocketTunes, without any bandwidth issues... It's awesome. Did I mention that you can do this in the background!! (Check out http://www.radioparadise.com if you want to know what I am listening to) (You need to trial the deluxe ptunes to get streaming internet radio).
7) Everything is much snappier.. Most likely improvements in the memory managment code, combined with much more RAM, lead to a very snappy user experience.. (Switching between apps seems instantanious).
8) Dowloading podcast over EVDO rocks!
9) MobiTV doesn't have any bandwidth issues.
10)The built in speaker seems to have improved power. (It's louder and clearer)
11) 60+ MB of useable internal storage goes along way
12) Just got my 4GB SD card from Transcend... It's awesome to have 4 GB of my Pics, movies, docs, and music with me and available to view, edit, or listen to.
13) Avvenu rocks with EVDO (Gives you access to the files on your home PC... Did I mention EVDO rocks!)
14) Blazer, while much improved, still isn't as good as the Mobile IE that comes with the 700W (Which I also own, in addition to a Lifedrive, and a 650.)
15) Love the built in camera. Running Splashblog with EVDO, makes network syncs that much better.
16) The Pictures and video application, now let's you store your albums on your carrier's servers... It looks pretty cool, but I don't think I'm going to pay the $5/month to use this feature, because I already use splashblog (http://www.splashblog.com)
17) SprintTV is kinda a letdown.. It looks like it isn't taking advantage of what EVDO coupled with the Treo screen can offer. (Video is like 150x120 pixels). One positive thing I can say for it is that it provides a very easy to use and intuitive interface for newbies to get streaming video and audio.
19) On Demand (Handmark's rebadged Pocket Express) is included. It is great little app for pulling up weather, news, sports, etc... Bravo to palm for including it...
20) The earpiece that comes with the phone has been updated to a stereo 2-in-1 combination stereo headset and telephone headset. I'm glad Palm spent the extra 50 cents on this improvement.
21)The keyboard is the best Palm keyboard yet.. While it's basically the same as the 700W, the keys are not as glossy as previous keyboards. This matte finish makes one handed typing easier and more tactially pleasant. The new button layout for the application and phone buttons is a great improvement. I was dubious at first, but I quickly got used to the new larger buttons and layout.
22) The unit as whole seems more solid in the hand, as compared to the 650. (e.g. - The battery cover has a much tighter fit) I guess that's the benefits of mass production... (The 650 is more custom crafted italian sports car. The 700, is like a BMW or Mercedes)

Overall, I'd say the 700P is a very worthy successor to the 650, and really delivers on the promise of the 650. (You could see the future with the 650, but the future is here with the 700p)

If you aren't locked into a contract, get a 700P!!

Patents:
--------
D519,502 Handheld device
D518,825 Keyboard for handheld device
D518,821 Handheld device
D518,820 Handheld device

To view them you will need to install a TIFF viewer plugin such as AlternaTIFF (http://www.alternatiff.com/#download)

Basically what this means, is that PALM has protection in place, that would prevent any competitors from introducing a Treo lookalike into the market..

This was a long time in the coming... Congratulations to AMD for pulling this off!! A superior product will eventually let the underdog take on the incumbent!! Opteron is an awesome chip.

Here's to a Greenday!!

Cheers,
stockoperator

Oh yeah, link - http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&symbol=HPQ&storyID=289736+16-May-2006+RTRS;

Let's see how things go tomorrow... I am hanging tight, and feel like we might have one more day of shakeout before we start moving upwards again.

It seems the options writers were trying to lower the price to buy back the May calls. Oddly, it seems that it didn't quite work out as planned. There was a huge increase in open interest in the June calls... No substantial selling of the May calls... Let's see if they can hold the line much longer. The pressure to correct upwards is growing with each passing day. (Instutitions just can't get enough of this stock. They are now holding 83% of the outstanding shares!!)

I've been trying to figure out what it was that got them to buy 15 million shares in three weeks... I think this buying is in anticipation of European launch partner announcements... I guess we just have to wait and see.

good luck,
-stockoperator

P.S. - I can't wait to get my hands on a 700P!!

http://www.forbes.com/markets/feeds/afx/2006/05/15/afx2748236.html

This currency has been artificially being help down.. China is finally going to let it float, as they have indicated that they feel their own market is overheated. They have raised interest rates, and are now loosing their dollar support.

This currency will be one of the few areas of strength, and it's move will be strong... and sustained.

As will all currency plays, be careful, they are volitile and can quickly move against you, so start reasonably)

Should be a good week for PALM!

Press release:
http://biz.yahoo.com/bw/060515/20060514005026.html?.v=1

Trecentral article:
http://www.treocentral.com/content/Stories/814-1.htm

WSJ article:
http://online.wsj.com/article_print/SB114766241067652711.html

Forbes article:
http://www.forbes.com/2006/05/15/palm-treo-smartphone_cx_df_0515palm.html

PALM homepage:
http://www.palm.com/us/

Looks like they were just plain buying a good deal when they saw it. Institutional ownership on PALM is now up to 78.3%

I guess two days of panicked markets overcame everything, and finally seeped into PALM.

Here's to a happy Mother's Day, and a fresh start to a new week.

Let's see if Monday's supposed 700P launch can do anything to change the mood. ;)

Good luck!
-StockOperator

http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=palm

As I said last night the shorts are going to "try" and knock PALM down... I also said that a wave of institutional buying will overwhelm the shorts.

Shorts have made their play. Now it looks like the institutions are making theirs. :)

One other thing is coming into play. PALM has hit the screens of bull traders, and they are going to jump in today:

http://nasdaqtrader.blogspot.com/2006/05/stocks-with-relative-strengthtechnical_11.html

Cheers, to all longs... Still stand by my predictions. ;)

P.S. - For "some reason" I can't post with my Yahoo ID anymore... Have a call into customer support now... If you are reading please post this to list..