) to underweight from neutral.
Analyst Paul Coster says consumer and business segment demand softened in the second half of the third quarter of fiscal 2003 (May). He says immediate prospects are bleak due to uncertain macro conditions, and a drop-off in PDA demand. Coster thinks the Tungsten W product is not sufficiently differentiated to spark consumer and business interest, and the lacks best-in-class client and server-side software that is needed to win market share.
He says the magnitude of Palm's planned layoff of 19% of its workforce shows dire market conditions, not just good housekeeping. He widened his 22-cent third quarter loss estimate to a 24-cent loss, and widened the 36-cent fourth quarter loss estimate to a 37-cent loss.