Reading the Future in Palm's Latest Earnings

Palm topped Wall Street's third-quarter revenue expectations, and boasted 738,000 unit shipments, well above analysts' predictions of 700,000.

But on Thursday, the maker of the Treo smart phone said earnings fell to $11.8 million, down from $29.9 million in the year-ago period -- and cut its outlook for the fourth quarter. David Garrity, director of research at Dinosaur Securities, joined "Closing Bell" to discuss what's wrong and right about the firm.

Garrity told CNBC's Melissa Francis that Palm's rising sales and dimmed expectations "confirms what Motorola said" -- that "price weakness is coming home to roost." The researcher noted that Motorola on Wednesday lowered its outlook -- and simultaneously dashed hopes that it was a "lead contender" to acquire Palm.

But he doesn't rule out the possibility of M&A altogether -- and says that suitors may include such heavy hitters as Microsoft and Google.


Garrity cites Microsoft's "big moves" into hardware, such as handheld digital music player Zune (would-be rival to Apple's iPod); and mentions industry scuttlebutt that Google plans to launch a "G-phone".