NEW YORK (AP) - Credit ratings agency Moody's Investors Service downgraded
ratings on Palm Inc. further into junk Monday, to "B2" from "B1," citing the
Treo maker's fiscal third-quarter results.
Moody's also left Palm's ratings on review for the possibility of further
downgrades.
On Thursday, Sunnyvale, Calif.-based Palm missed analysts' expectations as
its quarterly revenue dropped 24 percent year-over-year to $312.1 million and it
swung to an adjusted loss of 16 cents per share.
In a statement, Moody's said that though Palm has experienced record sales
for its lower-priced Centro smart phone through wireless carrier Sprint Nextel
Corp., "these gains weren't sufficient enough to counter declines in the
company's aging Treo product line and traditional handheld devices."
Moody's said the review for possible downgrade is due to rising competition
in the smart phone market, chiefly from BlackBerry maker Research In Motion Ltd.
and iPhone maker Apple Inc. In the statement, Moody's also cited "uncertainty
surrounding the company's ability to return to profitability and positive cash
generation."
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