PALM a Net Current Asset Value Play?

A number of bloggers have been pushing Palm, Inc. (PALM) as a "cash equals current market cap" play. This is not correct. PALM did report $622 million in cash and equivalents as of 8/31/07 compared to a current market cap of $573 million. However, they recently received a $375 million investment from Elevation Partners, and then promptly paid out a $900 million dividend to shareholders.

I don't usually bash fellow bloggers, mostly because one day I will make a mistake and don't want to be bashed myself, but this PALM investment theme was reported on Silicon Valley Insider, the blog authored by Henry Blodget, the former Wall Street super star analyst.

Here is an excerpt:

"Yes, we think Palm sucks. But it's worth observing that the company is trading for cash value.

At $5.50 a share, Palm has a market value of about $550 million, and at the end of August, it had about $550 million of cash. Thanks to its disastrous quarter, the company will undoubtedly take a restructuring charge, but it will still have a meaningful pile. And the 10% holiday headcount reduction should stem any cash burn for a while.

So the question is this: Can Palm be salvaged? Can it blow out its incompetent management team and recruit a better one? Can it be taken over by Research in Motion, Nokia, Motorola, or another gadget maker desperate to have a chance to compete with Apple?

If you think the answer is "yes," now is the time to look at the stock. Now, when everyone else is filled with feelings of love and admiration for Research in Motion and Apple and disgust and loathing for pathetic Palm."