Shares of Research In Motion and Palm dropped Tuesday after an analyst cast doubts on RIM's sales outlook and Palm said it expects revenue for its fiscal second quarter to come in below Wall Street expectations.
RIM shares tumbled to their lowest level in more than two years Tuesday, falling more than 6 percent to close at $37.32 Tuesday.
Shares of Treo smartphone maker Palm were down more than 12 percent to near $1.60 but turned to the positive side before the end of trading.
RIM's slide came after J.P. Morgan analyst Paul Coster wrote in a note to clients that he was reducing his estimates for the BlackBerry smartphone maker's fourth quarter and beyond, "reflecting our view that consumer and enterprise sales will be slower than originally forecast, owing to a global economic downturn."
However, Coster said that even with the outlook changes, he still sees RIM shares as undervalued. The stock has plunged from the year high of C$150.30 it set in June as the world economy stumbles and analysts and investors worry about the company's ability to hold its own in a downturn.
First, there are concerns that large corporate clients will delay BlackBerry upgrades or spending on new handsets in order to cut costs.
As well, Waterloo, Ontario-based RIM has pushed aggressively into the broader consumer market to diversify its customer base beyond the executives, politicians and other professionals who have been its mainstay.