Hello everyone!
Yesterday I sold my puts on the DAX @6.181,32 with a modest gain of 40 points. The index has broken the positive trend and come off its highs. Though trading at about 150 points below its recent highs I still cannot draw any conclusion about whether we have witnessed a minor profit-taking process or the beginning of a negative trend. Some data that is set to be released this week, like continuing and initial claims as well as the PPI are going to give us a broader look of what is to come.
Nonetheless, that doesn’t mean I will stop trading. I have been following Palm (PALM) for the last two weeks and the stock seems very attractive. Rumors suggest Palm has charged Goldman Sachs to look for an acquirer. This of course is not far from reality: Recent data released by Palm show disappointing sales of what was considered the company’s only hope: The smartphone Palm Pre. On top of it, growing competition on Apple’s and Google’s sides seem to force Palm’s board to opt for the company’s sale.
Palm is now trading at $4.82 resulting in a market cap of only $814m. Its cash reserves of $590m exclude bankruptcy for now. Still, Elevation Partners, Palm’s largest shareholder, is assumed to have paid an average of $5.50 per stock, which in turn suggests that it is going to try to sell its holding at higher prices and not file for Chapter 11.
RBC Capital assumes that solely Palm’s webOS is worth about $1.70bn to $2.30bn and predicts a selling price of up to $14bn. Investors could make more than 170% out of it.
As for now Hewlett-Packard seems to be the likeliest of all to snatch Palm, due to its need for a technology platform (to be combined with HP’s hardware platform) and assure its market predominance in the fight against Google and Apple .
