Palm's (PALM) Foleo pulled; financing in question

Palm Inc (NASDAQ: PALM), the California-based smartphone developer, has pulled its recently released Foleo product line, as it had turned out to be a big flop.

Now investors need to ask how they are going to make money in this stock. Is selling out to Motorola Inc (NYSE: MOT) or another handset manufacturer the only way? Despite a reasonably passionate following by Treo users, with many claiming the merits of the Palm produced device over that of the Blackberry produced by Research-in-Motion Limited (NASDAQ: RIMM), Treo just has not gotten enough of a following, as it failed to take the enterprise approach that Research-in-Motion took.

Further, as functionality improves and wireless networks are able to handle more capacity, low-end devices will be able to better handle data, making it even more difficult for Palm to bring new products to market.

All told, Palm is looking more like a value trap than a value stock. While management has done an excellent job improving its balance sheet and increasing its cash generation, this is one company that is now in desperate need of a new product, which looks like it could take a while. If you are buying Palm, you are betting on a buyout at this stage of the game.