Palm: Believe It or Not, I'm Walking on Air

Published on March 4, 2009
by John Paczkowski

greatest-american-hero_preInvestors are putting a lot of faith in the Pre’s ability to drag Palm back to its feet again. Despite the magnitude of the third-quarter miss the company warned of Tuesday, its shares are trading higher today, at one point reaching a peak of $7.86. It seems the market’s so taken with the Pre that it’s willing to overlook a jaw-dropping $70 million revenue shortfall.

Indeed, in a note to clients this morning, Piper Jaffray analyst Michael Walkley upgraded Palm to a buy, suggesting the Pre will finally bring an end to the company’s streak of crappy financial quarters. “We believe several carriers plan to launch the Palm Pre, and despite the challenging macro environment, we anticipate this unique product will resonate with consumers,” Walkley wrote. “We believe the ramp of Pre smart phones will result in a significant earnings recovery.”

And perhaps it will. Buzz around the device continues to build, with some consumers postponing new handset purchases in anticipation of the Pre. But Palm (PALM) better act soon. Because the longer it waits to bring the device to market, the closer we are to Apple’s (AAPL) next refresh of the iPhone, which will invariably suck all the air out of the smartphone room.

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