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.
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?