Goldman Issues Favorable Report Within 20 Minutes Of Palm's Earnings Release... And Goldman's Follow On Offering

Tyler Durden's picture

And so the pump and dump continues. Within 20 minutes of Palm's earnings release (one wonders just how much of a promptly completed "fill in the blanks" report this was) and disclosure that it is issuing a 16 million share follow on offering, joint-managed by none other than Goldman Sachs, the 85 Broad firm sends out this email (highlights added):

Sent: Thursday, September 17, 2009 4:20 PM


Subject: Palm, Inc. (PALM): Strong results and FY10 guide; equity raise should help fund growth


Goldman 360 Alerts has determined that the following matches your Alerts setting.


Palm, Inc. (PALM): Strong results and FY10 guide; equity raise should help fund growth


Goldman Sachs Global Investment Research September 17, 2009




Palm, Inc. (PALM) [$14.66]


Strong results and FY10 guide; equity raise should help fund growth


What's changed


Palm reported solid F1Q non-GAAP sales/EPS of $361mn/($0.10), above GS at $340mn/($0.20) and the Street at $291mn/($0.25) on much stronger than expected Pre shipments. We estimate Pre shipments of 670k, compared to GS/Consensus at 640k/550k. The company provided F2Q (Nov) sales guidance of $240-270mn, compared to GS/Consensus estimates of $424mn/$347mn, and FY10 (May) guidance of $1.6-1.8bn, compared to GS/Consensus of $1.9bn/$1.6bn. In addition, Palm announced an equity offering of 16mn shares for working capital & general corporate purposes.




On balance, we view Palm's results and guidance positively, as solid F1Q results and FY10 guidance more than offset disappointing F2Q guidance. We think the significant QoQ sales decline expected in F2Q is due to the timing of the Pixi launch (which we now expect in November vs. October previously), and declining Palm Pre and Treo Pro sales as those product cycles mature.


However, Palm's full year guidance implies a very significant ramp in the February and May quarters, likely driven by the ramp of Pixi at Sprint, Palm Pre at Verizon, and potentially other carriers. We are lowering our FY10 non-GAAP EPS to $0.09 from $0.28 given weak F2Q guidance, but leaving FY11 at $0.77 (Street $0.42) and FY11 at $1.10. Separately, we view Palm's equity offering, in conjunction with its recent price cut of the Pre at Sprint to $149 from $199, as an indication that the company is aggressively targeting volume growth, as reaching scale in the smartphone business is more important at this stage than margins.




There is no change to our 12-month price target of $15, based on 25X our non-GAAP CY10 EPS estimate (including ESOs) of $0.60.


Key risks


Downside risks relate to execution and competition, while upside risks stem from faster than expected WebOS adoption or a take-out.


Investment list memberships




Coverage View: Attractive


United States. Communications Technology

A very useful note to all longs, especially those who earlier today got a call wondering if they had any interest in purchasing Palm shares via the Goldman equity syndicate. Oh yes, here is the front page of the preliminary follow-on propectus. Splitting the 5% of equity raised, should provide Goldman with a nice $5 million fee.

And here are the disclosures to the Palm report:

  • Goldman Sachs has received compensation for investment banking services in the past 12 months: Palm, Inc. ($14.66)
  • Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Palm, Inc. ($14.66) [Oh yes, there is more of this shadiness coming up]
  • Goldman Sachs had an investment banking services client relationship during the past 12 months with: Palm, Inc. ($14.66)
  • Goldman Sachs makes a market in the securities or derivatives thereof: Palm, Inc. ($14.66)

And this, once again, is how Wall Street keeps perpetuating its tried and true games. Of course, FINRA, as Zero Hedge already pointed out, thinks this practice is perfectly legal and legitimate, thank to an October 2008 (no surprise on the timing: coming at a moment when regulators would do anything and everything to prop up collapsing stock prices) decision allowing underwriters to issue favorable research notes on follow on offerings in as brief a period of time as 20 minutes after they arrange the offering themselves. As always, Zero Hedge asks the question: of what use is the Wall Street regulatory body if it not only allows, but encourages this kind of pump and dump.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
max2205's picture

I want banks out of this biz, is GS still a "bank".


And why do we have the same ineternet bubble crap of rating issues then issuing stock.  SHUUUUUUUUUUMER, Wake The F up

Anonymous's picture

No one will do a sh** about it, especially our government! They may pretend to do something but they are not! You know why? Because they are all in on it too! So tough... Thi sis call the game of "house always wins"... They will just keep on ripping people off and every dumb fu**er will just keep on pouring money into wall street... is a casino! People like to gamble, what can I say...

Anonymous's picture

Internet bubble is a company that has no prospect of earnings in the next 10 years being rated strong buy with target of $100 bubbling up to 200 the next day. That my fried is an Internet bubble.

This is just mild stock pumping. I'm sure banks made many companies offers they couldn't refuse: "We run up your stock and you issue new shares and pay us a cut."

Anonymous's picture

GS is still a bank holding company. I think we need to rethink the entire financial system along with take out the political crap. Politics and Wallstreet bad combo.
Never let your dog watch over your food, never let congress watch over your money

McLuvin's picture

12 month price target of $15.  With 50:1 leverage, that would allow for about 115% upside potential. 

KeyserSöze's picture

Don't forget the historic implementation of SLP SIGMA X on the above October 2008 date....perhaps this is where Rahm got his "never waste a crisis" moniker...

SDRII's picture

Same ond story -- Cap markets "professional" whispers in the ear of said CFO over the course of the quarter advising on how best to window dress the Q (sequentials) all while the monkeys (Associates) toil away massaging comps, volumes and perfecting the "story." Parasites yes, but at some point the victim is to blame  

Tripps's picture

this type of pump and dump by underwriters is criminal


this is an outrage

Gilgamesh's picture

What's an outrage is that there are participants in these offerings.  Oversubscribed...  But that's a whole other investigation by itself.

Hephasteus's picture

Yes it's vital that these phones get out in mass market so that the people behind the scene can get access to enough bugs and video cameras to ensure they have all the information they need whether someone wants them to have it or not.

Anonymous's picture

actually that really is illegal if the equity research comment came out during the marketing of the deal. their research analyst should have been restricted from issuing any commentary on the company. somethign isn't right here, no way goldman flaunts the rules so audaciously when everyone knows that's such a clear no-no. if not, there will be fines coming and heads rolling in the compliance dep't at 85 broad. goldman likes to break the rules behind everyone's back not out in the open . . .

leathaface's picture

just read that article and i am thinking the same thing you are.

Hephasteus's picture

I watched a really good video series of the subtle manipulation of the presidential election. It was really good work. I wonder how much of this just happens though with people being part of it without knowing they are part of it just going along with gentle proddings.

MyKillK's picture

Sounds interesting. Link please!

Hephasteus's picture

It's called how the illuminati made Obama the President  9 parts. Here's first

What's funny is he has a middle eastern accent and I had so many middle eastern professors in my classes I can understand him perfectly but I can hardly understand a Irish accent. LOL

But what I found interesting is some of his comments on how they are undermining old religious methodologies now. It made me think about about some of the Jimmy Carter years.

Anonymous's picture

didn't like your video

Anonymous's picture

Here's a crazy conspiracy theory: a former Chairman of Halliburton gets himself elected VP, then that Administration launches a huge war based on false intelligence, and then Halliburton is handed a no-bid contract for billions of dollars for reconstruction.

But that could never happen, right? I mean someone would call foul, and people would go to jail, right?

Hephasteus's picture

Man if he would just kill someone without going to jail that would make a great book.

Hrundi V. Bakshi's picture

the sad thing is that GE needs the govt's help to make money not to mention TARP to keep itself a float.

TwoJacks's picture

enjoyed the repeated use of the word "ramp" in that email. perhaps we're seeing them change the name of the game to "ramp and dump."

GoldmanSux's picture

Doesn't the LAW state GS is restricted on this stock?

stoverny's picture

A collapse is inevitable.  At this point everyone knows the game is crooked.  However they are still pressing their luck at the tables, playing with "house money".  People who are making money know the entire game is a sham, but they don't care because they think they've got it figured out. 


Hence all the, "Why complain about Goldman's pump and dump, just hitch a ride and make some easy $$$!".  Once you start hearing a lot of that, the collapse is pretty much guaranteed.  No one has sincere trust in the market.

Anonymous's picture

Americas technology industry mostly consists of cellphone headsets.

Anonymous's picture

I don't know why folks keep running around the issue here can call it "pump-and-dump". It's a fraud, plain and simple. All the euphemisms and PC attitudes in US are really getting a bit annoying.

Anonymous's picture

Looks like GS is desperate to make money. Doesn't even care world is watching. May be they are in trouble again.

AN0NYM0US's picture is slowly but surely becoming a legit news source - come to think of it who actually has more credibility?  Charles Gibson or Alex Jones - I have to give it to Alex hands down - same for the other MSM talking heads - how pathetic is that

Anonymous's picture

Hey somebody's got to pimp this stuff out!

Now all you whoremongers get out there and Hump and Pump!

Because eventually, who won't have an investment banking services client relationship with the Vampire Squid.

Anonymous's picture

roflmfao, this is criminal, similiar practice as rating agencies, these guys should all go to jail

straightershooter's picture

China readied to nullify derivative contracts entered with 6 investment banks.

Ok. Let the war begin and see what kind of frauds were employed by the six major investment banks.

The question which six major investment banks? My guess is Goldman Sachs, JP morgan, Bank of America, Citi, HSBC, and Morgan Stanley?

It will be interesting to see the beginning of the end............

Anonymous's picture

GS doesnt bother to cover its conflict of interest anymore, just to show everyone how powerful they are in controlling wall st, fed and US govt.

River Tam's picture

It worked for BAC.

Gabriel Gray's picture

Time to implement a quiet period for all brokerage firms reports before and after earnings announcements.

Optimystic's picture

By Steve Goldstein, MarketWatch

Palm fell 3% after the company disclosed that the release of the Pre device wasn't enough to pull the company into profitability. Palm lost $164.5 million in the most recent quarter.

"Palm shares still trade well above their closest comparables, including Research in Motion, and in our mind continue to conceal the inherent risk in depending on two products and few customers," said analysts at Jesup & Lamont Securities.


Anonymous's picture

Who is getting hurt here? Goldman doesn't have any large retail brokers and the ones they have see right through this. Instl investors know better, so who cares?

cocoablini's picture

PALM is total piece of crap stock to boot. Their sales are mediocre and they would have to sell toe to toe with the iPhone to even get out of that debt hole.

Cash burn is extreme. Reliance on a very nice, but singular product. 2nd product is not really interesting. I expect because of poor sales, they need the secondary offering and that bodes poorly.

It's too bad, the PRE is pretty dope. But too little too late.

Meanwhile, Goldman talking the book and pumping probably one of the worst consumer stock prospects on the markets. These guys are parasites...

Anonymous's picture

well, atleast they didn't upgrade it