Earlier today PalmSource (
PSRC) was
downgraded by Needham & Co from Buy to
Hold, because of the company's decision to port its Treo handheld computer product line to Microsoft's Pocket PC operating system. Needham said it thinks the current valuation of PalmSource reflects the potential upside of license fee revenue from rising Treo sales that could be lost to Treos running on Microsoft's platform. The broker left its financial estimates for the company unchanged for now, because the timing of the product's introduction is still uncertain.
As a result, PalmSource shares slumped more than 9 percent today.
The fact that the Treo is supposed to be ported to Pocket PC makes all my alarm bells ring. Did you hear about that before? I try to read all the news, but somehow it must have slipped me that PalmSource (or is it palmOne?) wants to step into the realm of Pocket PC. What do you make of it?