Leopard Strategy - Siyu's Hybrid Stock Pick

Tuesday, December 05, 2006

PALM - Part I

I have a lot of respects for those companies that had a sucessful product before, then was defeated by others, and finally turned around after a few years with a new product and won the market again. I call them 2nd-time front runner.

Being a 2nd-time front runner isn't easy - those companies usually have visionary and determined leaders, disciplined strategy, strong belief in their ideas and products, last not the least, a little bit luck from time to time.

Arguably, Apple Computer (APPL) is a classical 2nd-time front runner. First sucess came when Apple II was invented, followed by Mac, then almost completely defeated by Microsoft (MSFT) in early/mid 90's. However, after almost a decade later, it came back with a home-run product - iPod, and become No.1 in the music business.

Believe it or not, Palm (PALM) has a similar storyline - its first success came when PalmPilot hit the market in mid / late 90's, kept its market leader position for a good 2-3 years - lost steam once HP, Dell, Microsoft(again!) became interested in this sector and came up with competitive products (Pocket PC). However, in 2004, Palm came back to the market with its Treo 600, and later 650 - deemed so far one of the best Smartphone product lines. I talked to many Smartphone users and haven't yet heard anyone dissatisified with Palm Treo product.

Let us take a look at Apple Computer (AAPL) - its stock was flat from 2001 to early 2004, and didn't take off until early 2004 (~$13, see chart below), and never returned after that, and it reaches all time high now at $90! Interestingly, its first iPod 1GB product was released in Oct2001 - more than 2 years before its stock recognizes the value of the product.


What about Palm? Palm Treo 600 was first successfully released in July2004, that was almost 2.5 years ago! Will its stock price be finally recognized, just same as Apple? I think it is possible - you may point out that Treo is not comparable to iPod (given iPod's absolute market leader position, while there are more competition in Smartphone industry), good point.

But my view is, in many cases, a popular and profitable product will be reflected finally in stock price, though sometimes, it takes a painful long years.

This is my Palm analysis Part I - next time I will provide information from different perspective to continue to build the case. Stay tune. As I mentioned in my previous posts, I already bought some PALM last week (1/2 unit). Plan to buy another 1/2 unit in the coming days.

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