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Palm Shares Surge as New Phone Impresses

Topics:Wireless Communications | Technology

Sectors:Telecommunications | Technology

Companies:Research in Motion Limited | Palm Inc | Sprint Nextel Corp | Apple Inc | ATT Inc

By: Reuters | 09 Jan 2009 | 03:47 PM ET

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Shares in Palm surged over 30 percent on Friday after its new touch-screen phone and mobile operating system impressed analysts, giving investors hope it may win customers from rivals such as Apple.

The new smartphone, Pre, was introduced at the Consumer Electronics Show in Las Vegas on Thursday, and analysts said it could help Palm regain some of the market share it has lost to Apple's iPhone and Research in Motion's [RIMM Loading... () ] BlackBerry.

"Our initial reaction to the new Palm Web OS (operating system) and Palm Pre smartphone is decidedly positive," said Avian Securities analyst Avi Cohen, adding that the new product appears "elegant, intuitive, sufficiently differentiated, and... a legitimate competitor to the iPhone."

Palm shares [PALM Loading... () ] leaped more than 35 percent Friday.

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Shares in Sprint Nextel [S Loading... () ], the carrier for the new phone, rose about 4 percent. Shares in Apple [AAPL Loading... () ] fell more than 2 percent, in line with the overall market. AT&T [T Loading... () ], the exclusive carrier for the iPhone in the United States, were down about 1.5 percent.

"Palm's new Pre could drive web traffic on Sprint's network similar to the way the iPhone drove data traffic on AT&T's network, a potential positive," said J.P. Morgan analyst Ehud Gelblum.

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