Pre Historic: Analysts React to Palm Announcements
Palm’s long-suffering investors have apparently drunk themselves silly on Palm Pre Kool-Aid (here at ATD, we tasted it briefly and promptly spit it out). Shares of the much diminished handset maker climbed almost seven percent to $4.45 Thursday after the company uncrated the device and Web OS, the new platform it will run on. This morning, they climbed another 96 cents to $5.47.
Wall Street seems convinced that the Pre is not a postscript for Palm (PALM), but the beginnings of its rebirth. A historic turning point worthy of a trading bacchanal. Indeed, expressing a “renewed confidence in Palm’s prospects, Standard & Poor’s raised its target price on the company to $4.50 from $2.50. “Pre uses a new operating system that allows for the merging of multiple data sources,” Standard & Poor’s analyst Todd Rosenbluth said in a research note. “While the new system has been in long-term development, we believe it could help to bring consumer and carrier interest back to PALM’s devices, which have been losing market share.”
Matt Hoffman of Cowen & Co. agreed. “We believe WebOS will immediately be competitive with the industry’s most advanced mobile platforms, including Apple’s OS X and Google’s Android,” he wrote in a research note to investors.
Other analysts, while similarly optimistic, tempered their enthusiasm with hardcore market realities.
“Palm’s challenge will be to steal at least some of the thunder from the heavyweight contenders in the smartphone market,” said Charlie Wolf of Needham & Co. “In our opinion, the Pre clearly outshines Windows Mobile and Google’s Android platform in their current iterations. But whether it can gain breathing room in an increasingly crowded market remains an open question, especially in view of the prospect that stunning new operating systems and smartphones will also debut during the year.”
“Palm came out with guns blazing,” he told RCR Wireless. “They met or exceeded expectations. This gives the company a sense of momentum and a return to confidence. Of course, the bigger question is how the device is marketed. Will it launch on time? Will AT&T Mobility and Verizon Wireless get on board? Sprint alone isn’t enough to save the day. The profitability impact at this point is unknown.”
