World Of Wallstreet

Going To Zero: PALM after its PRE phone fails...

Well, I'm back to looking for stocks to short as I think the spring rally is just about over.

One that I'm watching closely is PALM. You may remember the PDA leader with the Palm Pilot. They've been losing money like crazy and have bet the company on a smart-phone that competes with RIM's Blackberry and Apple's iPhone on price and yet has to compete on price with Motorola and Google (the Android phone). The Motorola / Google platform is open-source which gives it clear advantage when it comes to cost. Palm's efforts look like they are pretty out-gunned to me.

I'm expecting an exhaustion top with the formal product roll out announcement and then when it consolidates or turns down I short. I may begin building up a long in one account, short in another account as a way of making sure I can short it when the time comes.

This seems like a replay of Creative (CREAT) fight against Apple's iPod (where Creative's cheaper product was creamed by Apple's panache and iTunes store) only this time Apple is the incumbent.

Here's an example (from trends.google.com) of Palm's mind share relative to Apple's:
As you can see (little blue line showing up near zero in 2009), the Palm Pre is completely unknown to the public. Palm doesn't have any genuine cost advantage. This is a platform play, where the winning platform takes all. I just don't see how they can compete with Apple, RIM and Motorola/Google/Open Source. The only thing that gives Palm a chance is Apple's exclusive deal with AT&T. Is that enough to allow them to succeed? I doubt it.

Here's the chart. It looks great, but it also looks like its had great momentum. I'll wait until the fundamentals catch and turn the chart ugly before entering.

Like I said, I'm waiting for the exhaustion top and then I go short.

I have not completed my due diligence, so let me know why I'm wrong. What defensible market niche does Palm have a shot at?

MontyHigh, www.worldofwallstreet.us

Going To Zero: Got Some Raw Ideas

Investor Village to created a "Going To Zero" bulletin board (click here) at my request.

I asked for this board to be created because I think that as the recession / depression deepens that there will be a chance to make significant money shorting stocks next year, specifically stocks that whose companies are destined for bankruptcy (thus GOING TO ZERO).

The table below provides the list of ideas generated so far. If you'd like to contribute, please join us.

MontyHigh

P.S., like the original art provided by my nephew?

Sym	Name	Sector	Industry	Stage	Story	Contributors
GPI	Group 1	Services	Auto Dealerships	Raw Idea	Mish says auto dealerships are in trouble.	rzld36
AN	Auto Nation	Services	Auto Dealerships	Raw Idea	Mish says auto dealerships are in trouble.	semiwiz2002
LAD	Lithia Motors	Services	Auto Dealerships	Raw Idea	Mish says auto dealerships are in trouble.	semiwiz2002
ABG	Asbury Automotive Group	Services	Auto Dealerships	Raw Idea	Mish says auto dealerships are in trouble.	semiwiz2002
ZLC	Zale	Services	Jewelry Stores	Story	Toby's Newletter contributor recommendation.	montyhigh
UNK		Services	Trucking	Raw Idea	YRC, a well run trucking company is struggling. There have to be trucking companies that are worse off.	riss lake troll
SPG	Simon Properties Group	Financial	REIT – Retail	Story	Debts are massive, vacancies are rising, rents dropping, and commercial real estate prices are dropping. Going to zero isn't a sure thing, but going a LOT LOWER is. An excellent long term short here.	bigenergybull
AAPL	Apple	Technology	Personal Computers	Discontinued	May be over-valued, but isn't going to zero.	johnhnhn
LBY	Libbey	Consumer Goods	Housewares & Accessories	Story	LBY can't make money. It is running out of cash, has a Quick Ratio well below 1.0, and a tangible book of -131m, due to crushing debt. It lost money last year at Christmas, and this year surely will be worse.	public_heel
UNK		Financial	Life Insurance	Discontinued	Discontinued. I don't have the background to analyze their balance sheets.	semiwiz2002

Going To Zero: The Quest For Shortable Stocks Going Bankrupt

Investor Village to created a "Going To Zero" bulletin board (click here) at my request.

I asked for this board to be created because I think that as the recession / depression deepens that there will be a chance to make significant money shorting stocks next year, specifically stocks that whose companies are destined for bankruptcy.

Specifically, I'm hoping this board will be a place where we can collaborate on generating ideas for, qualifying and tracking stock shorting situations where the fundamentals indicate that the company is going bankrupt (thus the name, GOING TO ZERO).

I'm looking for folks who can generate some ideas and also do the fundamental analysis (reading of balance sheets and income statements) necessary to determine if the outlook for the company is "Going To Zero".

I see that Zack's (click here) says the earnings growth outlook for Q1 2009 is particularly dismal for the Energy (-31%), Materials(-51%) and Consumer Discretionary(-46%) sectors. I'll start looking there, probably using the premium MorningStar screening service looking for stocks in those sectors that have low cash and high-debt.

So, please feel free to drop by and contribute or leave a comment here with some thoughts on sectors, industries or stocks or thoughts on how to screen for the right kind of stocks.

MontyHigh