Riffing on rumors of a Verizon (VZ) iPhone, Morgan Stanley (MS) analyst Katy Huberty theorizes in a research note this morning that given the opportunity, nearly 17 percent of the carrier’s customers would upgrade to an iPhone (see chart below; click charts to enlarge).

“According to our [Alphawise U.S. consumer iPhone survey], there is substantial pent up iPhone demand within the Verizon installed base as 16.8 percent of Verizon subscribers said they are ‘very likely’ to purchase an iPhone if offered on the Verizon Network,” Huberty writes.

“This 16.8 percent is higher than AT&T subscriber’s 14.6 percent extreme interest in the current AT&T iPhone,” Huberty elaborates, “and well above the overall iPhone extreme interest of 7.5 percent.”

Assuming Verizon does add the iPhone to its smartphone lineup and that most of its subscribers who said they were “very likely” to purchase the device do so over a two-year period, Huberty figures Verizon stands to sell about seven million to eight million iPhones annually.

Interestingly, Huberty’s forecast for Phone demand at Verizon does not assume sizable subscriber losses at AT&T. In her view, the end of the carrier’s iPhone-exclusivity deal won’t be the blow some observers claim. AT&T (T) and Apple (AAPL) will obviously remain partners, she says.

In markets where the iPhone has gone from single-carrier to multiple-carrier distribution–France, for example–the carrier that lost exclusivity hasn’t suffered much at all. Beyond this, there’s the issue of early-termination fees, which will make it difficult for current AT&T iPhone users to flee. Says Huberty:

• 60 percent of the iPhone base is locked until 2H11/1Q12. An iPhone refresh could bring a new wave of subs to AT&T and extend the lock-down of those who upgrade. 80 percent of AT&T’s postpaid subs are sticky customers (70 percent are on a Family Plan (FP); 40 percent on business discounts).
• For current subs, the Early Termination Fee (ETF) is $175 falling $5/mo for the term of the contract; for new smartphone subs it’s $325, falling by $10/mo. Every line on a FP has a contract/ETF of its own. In addition, customers would have to pay for a new device if switching carriers.

One final point: Huberty sees Apple shares hitting $400 sometime in 2011. Why? “The market underestimates the earnings power of Apple’s mobile Internet devices,” she wrote. “We view the combination of new product launches, broader distribution [carrier, international, enterprise], more attractive pricing and strong upgrade rates as the key demand drivers over the next two years.”

In a research note to clients this week, Whitmore argues that HP (HPQ) needs to work some serious financial magic on Palm (PALM) in order to make it EPS-neutral in 2011. Specifically, the company needs to triple revenue to $1.2 billion and double gross margins to 44 percent while keeping operating expenses flat.

“By all measures, this appears to be a Herculean task given the declining momentum behind WebOS among consumers & developers,” Whitmore writes. “While we do see merit in HP’s strategy to extend WebOS beyond the smartphone market into slates/tablets/etc, the investment required to tap this opportunity may be larger than expected….”

As Whitmore notes, “In reviewing Palm’s financials, Palm spends ~$500M annually in Opex (R&D and sales and marketing) to support the WebOS platform. Given the severe loss of market momentum behind WebOS, we believe it is reasonable to assume that HP will need to grow this investment by 50-100%, to approximately $750 million-$1.0 billion.”

Obviously, a significant investment. That said, HP has so far given every indication that it’s willing to make it. As HP exec Jim Burns emphasized during a conference call last week, the company plans to pump quite a bit of money into Palm.

“We’re going to increase [spending on webOS],” Burns said. “And we’re going to increase sales and marketing as well. We’re going to take this platform, which today exists for smartphones only, and make it much broader than that….We are going to be investing heavily in this business in the next year.”

So begins a research note from RBC analyst Mike Abramsky that’s a good representation of the market’s reaction to Apple’s latest blow-the-roof-off-the-sucker quarter.

The 90 percent spike in profit the company reported yesterday, which surpassed already lofty expectations, inspired a rush of analyst notes this morning, all of them enthusiastic, all of them containing raised target prices on Apple’s (AAPL) stock (Eric Savitz at Barron’s has the full run down).

Abramsky, for example, raised his target price to $350 from $275, and he wasn’t the only one. Chris Whitmore at Deutsche Bank did the same, saying, “Apple continues to show both impressive growth and profitability and is well positioned to benefit from the confluence of three major product refreshes beginning in the June quarter, namely: iPad, Macs and iPhone refresh expected this summer.”

Over at Broadpoint.AmTech, Brian Marshall raised his target to $320 for similar reasons: “Apple continues to gain share across its major product lines (iPhones, Macs and iPods),” he wrote in a research note. “Its business model is becoming stronger over time as well as the company benefits from an increasing richness of its revenue mix and when ASP cuts come, customers typically migrate up the ‘SKU stack’ and buy higher priced items with higher associated gross margins.”

And at Piper Jaffray, analyst Gene Munster dismissed Apple’s comically conservative guidance, upping his target to $323 from $299. Apple’s June quarter will be an encore to the one it just delivered, he said in a research note.

With a new iPhone waiting in the wings and the much ballyhooed iPad having just arrived at market, it does seem that way, doesn’t it? Consider this from Munster:

“Apple indicated that early iPad sales exceeded company expectations, which we see as a positive indication for the long-term investment prospects of the iPad segment. As the value proposition clarifies, we believe investors will begin to see the iPad as a Mac for the masses. In other words, the iPad is a lower-ASP device that accomplishes many everyday computing tasks as well as a Mac; as such, we believe the addressable market for the iPad is larger than many investors believe.”

If this proves true, expect Apple to deliver another of its “best quarters ever” when it next reports earnings.

At $258.14, Apple shares are trading up 5.54 percent today.

The Street is expecting earnings of $2.44 a share on $12 billion in revenue, and most analyst reports I’ve seen so far suggest Apple will easily meet those expectations and perhaps surpass them.

As I’ve noted here before, NPD sales data for the first few months of 2010 points to strong Mac sales, up 39 percent year-over-year through the first two months of the March quarter. Apple iPhone sales are likely to be impressive as well given increased international distribution and broader carrier support.

“We believe Apple will report ~7.25M+ iPhones in the quarter due to strong iPhone 3G S adoption and better penetration into international markets,” Deutsche Bank analyst Chris Whitmore wrote in a research note.

“In addition, we expect solid Mac results (healthy units) and positive product mix towards iMac and MacBook Pros (DB at 2.9M units) due to the continued benefit of the refreshed iMac line up,” the analyst notes. “We expect iPod units of ~10M and the continued mix improvement to support iPod revenue (i.e. strong iTouch).”

Healthy numbers if Apple (AAPL) delivers them, and a nice segue to the company’s June quarter, the first to reflect the market debut of the iPad and last week’s update to the MacBook Pro lineup.

“It is true that ‘Congress gave the [Commission] broad and adaptable jurisdiction so that it can keep pace with rapidly evolving communications technologies,’” the three-judge panel wrote in its order (full text below). “It is also true that ‘[t]he Internet is such a technology,’ indeed, ‘arguably the most important innovation in communications in a generation.’

“Yet notwithstanding the ‘difficult regulatory problem of rapid technological change’ posed by the communications industry, ‘the allowance of wide latitude in the exercise of delegated powers is not the equivalent of untrammeled freedom to regulate activities over which the statute fails to confer…Commission authority.’ …The Commission has failed to tie its assertion of ancillary authority over Comcast’s Internet service to any ‘statutorily mandated responsibility.’”

In other words, as much as the FCC would like to tell Comcast (CMCSA) how to manage its network, it cannot do so without an explicit mandate from Congress.

This is a nasty blow to the FCC’s effort to establish a formal set of Net neutrality rules and to its National Broadband Plan. The FCC can’t really regulate broadband without clear authority over the companies that provide it.

That said, the FCC does have a few options going forward, as Bernstein Research analyst Craig Moffett explained in a research note to clients this morning.

“Broadly speaking, the FCC has three options. First, the FCC can go to Congress and request the necessary authority. Second, it can go to Congress and request net neutrality legislation. Or third, the FCC can reclassify broadband to bring it under FCC jurisdiction. This third option has been called by some ‘the nuclear option.’”

According to Andrew Jay Schwartzman, senior vice president and policy director for The Media Access Project, the nuclear option may be the best bet.

“While we are, to put it mildly, unhappy about this decision, the FCC’s choices are not quite as bleak as you suggest,” Schwartzman told me. “It has the option of classifying broadband as a Title II service, which was what it did until 2005. While this, too, will be subjected to the inevitable court appeals, many of us think that this will be sustained, and we’ve asked the FCC to do this. This is especially important as legislation would take a very long time to be enacted.”

Full Text Comcast vs FCC Federal Court Ruling

Interestingly, the sales figure is also on par with the 270,000 first-gen iPhones Apple (AAPL) sold during that device’s first 30 hours at market in 2007.

It’s important to remember, though, that this first-day sales number is for Wi-Fi-only iPads sold in the U.S. The figure does not include sales of the 3G version of the device, which arrives at market in a few weeks. Nor does it include online pre-orders with an April 12 ship date. Makes you wonder if Apple is purposely lowballing here …

Apple Sells Over 300,000 iPads First Day

CUPERTINO, Calif., April 5 — Apple® today announced that it sold over 300,000 iPads in the US as of midnight Saturday, April 3. These sales included deliveries of pre-ordered iPads to customers, deliveries to channel partners and sales at Apple Retail Stores. Apple also announced that iPad users downloaded over one million apps from Apple’s App Store and over 250,000 ebooks from its iBookstore during the first day.

“It feels great to have the iPad launched into the world — it’s going to be a game changer,” said Steve Jobs, Apple’s CEO. “iPad users, on average, downloaded more than three apps and close to one book within hours of unpacking their new iPad.”

“We estimate Apple sold between 600-700k iPads (including online pre-orders which started on March 12th) on the first day (4/3),” he wrote. “It took Apple three days to sell a million iPhone 3GS and iPhone 3G’s, and 74 days to sell 1m original iPhones.”

Interestingly, Munster said that inventory is not quite as constrained as one would think given Apple’s decision last week to push some iPad pre-order shipments ahead to April 12.

“As of 7:30PM ET on Saturday night (4/3), 19 of 20 stores we called still had availability of all models, which is a positive for first day sales given Apple was able to fulfill most demand,” Munster wrote.

“In addition,” the analyst continued, “we noted longer than expected lines at the five Apple stores we surveyed. For example, at the 5th Ave Store in New York we counted 730 people in line at 9am (when iPad sales began) compared to our count of 350 people for iPhone 3GS, and 540 people for iPhone 3G.”

Which is not to say that Sacconaghi disputes the iPad’s potential as a market-defining device. He just wonders if there aren’t a bit too many unknowns at present to make hard and fast predictions about its sales trajectory.

“What will international pricing be?” Sacconaghi asks in a research note issued this morning. “What sort of media content will be available, and how quickly? How rapidly will Apple increase distribution beyond the 10 countries announced so far, compared to the iPhone which is available in 89 countries? How prevalent will non-Apple distribution be?”

Reasonable questions. And without answers to them, Sacconaghi is playing it safe with his sales estimates. He expects Apple (AAPL) to sell between 300,000 and 400,000 iPads over launch weekend–including pre-sales. But he figures the device will sell five million in its first full year at market and 6.8 million in fiscal year 2011.

“We note that the initial iPad launch will be a US only launch and will not include 3G models; we suspect that total (including pre-sales) first weekend sales will be slightly higher than the original iPhone’s first weekend (270K), given the iPhone had a similar price, and was US exclusive (although it did not offer pre-orders),” Sacconaghi writes.

“Our analysis suggests that iPhone sales run rates have fallen significantly (i.e., by a factor of 4x – 9x) following launch weekends; we think a drop-off in sales at the high end of this range is likely appropriate for the iPad, given that pre-sales will have boosted first weekend sales. Such a drop-off in iPad sales from our launch weekend forecast would result in unit sales for year 1 of about 5 million units in-line with our estimates.”

That might not be an “over-zealous” estimate in Sacconaghi’s eyes, but it’s certainly a bullish one. Still, the analyst concludes that the iPad’s near term financial implications for Apple may not prove to be as magical as investors hope.

“We believe that while the iPad may evolve meaningfully over time, we expect its impact on Apple’s earnings to be minimal during FY 10,” he says. “In the immediate term, iPad expectations appear over-zealous, which could provide a relative short-term disappointment for investors.”

FURTHER READING:

Launch Day iPads Sold Out

iPad Available at “Most Best Buy Stores” This Saturday

Apple Grabs iPad Trademark From Fujitsu

Apple Now Accepting iPad App Submissions

Early Supplies of iPad Accessories Dwindling?

Initial iPad Demand Greater Than Initial iPhone Demand

iPad TV?

Apple’s Tablet: Read Different?

Rumored Apple Netbook Actually an E-book?

Coming Soon From Apple: Big Touch?

iTablet: Apple’s Killer App for Higher Ed

COMPLETE IPAD COVERAGE

“iPad yields should improve dramatically throughout the year even if the launch starts out capacity constrained,” Reitzes wrote in a research note to clients today. “These developments support upside to consensus forecasts for the iPad, should demand materialize like we think it can. We estimate Apple will sell almost 5 million iPads for CY10; including 1.2 million in the June quarter–which could prove conservative.”

As for the iPhone, the analyst says, “Also, we have increased confidence that Apple will make a big splash this summer with a new iPhone form factor. We believe that the new model will launch with considerable fanfare and expect unit expectations to rise in turn.”

“Big splash,” “considerable fanfare”: That’s certainly been the case with iPhone launches to date. No reason to expect things will be any different this time around.

As for iPad sales, there’s really no telling yet, though “people familiar with the matter” have told The Wall Street Journal that Apple has sold hundreds of thousands of units via pre-order and could end up selling more iPads in the first three months than it sold iPhones in the three months after that device’s debut.

In a research note issued this morning, Huberty describes a “positive correlation between Apple (AAPL) store expansion and Mac market share” and applies it to Apple’s plans for 25 new retail stores in China. Though the company has less than one percent market share in China today, she writes, there is significant untapped demand for its products.

“Our Dec ’09 proprietary survey of 1,050 high-end Chinese consumers, representing an addressable population of 50 million, points to strong underlying demand for Apple products….What’s more, Chinese Apple product owners are 2x more likely to purchase future Apple products according to our survey. We believe Apple’s investment in China targets the revenue upside from this halo-effect.” (Click on charts below to enlarge.)

And that’s a safe bet: As COO Tim Cook noted during Apple’s January earnings call, “if you look at greater China last quarter, which is China, Hong Kong and Taiwan, our revenues tripled year-over-year in that geography which is I think phenomenal by any measure. We have a tremendous focus on it.”

If the ship date was to be April 3, why didn’t Jobs say so at the January event?

Obviously, it’s impossible to say. Though it’s certainly interesting that Jobs couldn’t offer a hard ship date for a major product that was just two months out.

Does this mean Apple (AAPL) may have run into a bit of an iPad manufacturing hiccup after all? I suppose it’s possible. Cannaccord Adams analyst Peter Misek, who first reported alleged production issues with the iPad, certainly thinks so.

“In our previous note we discussed that the upcoming iPad launch may be somewhat limited as a manufacturing bottleneck has impacted production,” Misek wrote in a research note to clients this morning. “We also suggested that there is a possibility that the launch will be delayed by a month due to a limited number of units available.”

Updating his assessment, the analyst notes, “According to today’s announcement, iPad is delayed by a week in the U.S. and by a month for some international markets. We believe the delay was caused by an unspecified production problem at the iPad’s manufacturer as we indicated earlier this week.”

Or perhaps this is simply about Apple’s level of visibility into its supply chain. After all, you’d think if there really had been production issues with the device, we would have been looking at delays of far longer than just a few days.

Either way, it’s really not of consequence to the company in any material sense. At $218.50, Apple shares are up nearly four percent on news of the April ship date. Obviously, Wall Street doesn’t care whether the iPad is late or not. And in the end, does it really even matter?

UPDATE: John Gruber has some interesting thoughts on all this over at Daring Fireball.

“We expect Apple to launch new iPhones in June that offer both a lower total cost of ownership and new functionality, potentially including gesture-based technology,” she wrote in a note to clients today. “As we’ve highlighted in the past, the cost of device + service plan is currently the biggest barrier to incremental demand in both mature markets like the US and emerging markets like China.”

Now, when Apple (AAPL) introduced the 3GS in 2009, it dropped the price of the iPhone 3G to $99, so it seems reasonable to expect the company to follow a similar pattern when it introduces a new iPhone. Might the price of the new device itself also be lower than expected? Perhaps. Certainly the fact that Apple was able to bring the iPad to market at $499 suggests it’s possible.

More intriguing than these ruminations on price, however, is Huberty’s mention of new “gesture-based technology.” The analyst doesn’t offer any details on what this might be, but presumably she’s referring to advances disclosed in some recent Apple patent filings.

Among the possibilities here: A touch-sensitive bezel that would turn the outer edges of the device into intelligent “sense lines” that give users quick and easy access to their favorite applications, and some camera-based swipe controls that offer one-handed control over a variety of iPhone functions.

Here’s a description of the latter from Patently Apple, which does a far better job explaining these things than I ever could.

[This] patent reveals yet another innovative concept that is designed to help users control their incoming calls and voicemail by simply swiping their finger over the external camera lens. It will control rewinding and fast forwarding voicemail. In addition, the new methodology will also enhance one handed navigation of Web pages, documents, a contact list or your iTunes library by simply swiping the camera lens in different swiping motion combinations. In the future, the iPad may be able to take advantage of this feature if the camera is positioned correctly. This would theoretically allow a user to simply flick a finger over the camera lens to turn the page of a book or scroll a webpage without ever having to move your hand.

Sounds pretty slick, yeah? Certainly, a feature like this would take smartphone navigation to a new level. Were it to be included in a next-generation iPhone along with a five-megapixel camera, LED flash and video chat support that’s rumored–well, Apple might not need the lower price point as Huberty suggests to juice demand for the device.

Will lousy brand awareness be Palm’s Waterloo? With weaker than expected launches of the Pre and Pixi at new carrier partner Verizon, it’s beginning to look like it.

Certainly, Palm’s leadership appears to believe that insufficient carrier support is largely to blame for its current woes. In an all-hands memo to employees yesterday (full text below), Palm CEO Jon Rubinstein said the company is taking some extraordinary measures to address unexpectedly weak sales for its handset lineup. To drive demand at Verizon and raise its customers’ apparently limited awareness of webOS, Palm (PALM) has initiated Project JumpStart, a sort of product evangelism outreach program.

“To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon (VZ) sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations–all getting the word out about Palm.”

A wise move, particularly given reports that Verizon sales reps unfamiliar with Palm’s smartphones often opt to pitch more familiar devices like Motorola’s (MOT) Droid and RIM’s Blackberry to new customers. Additional in-store training should help drive sales volume, assuming Palm’s offerings are compelling and differentiated enough to withstand comparison with rival devices.

The question, of course: Are they? And while initial reviews of the Pre and webOS operating system suggested they were, it’s hard not to look at Palm’s current situation and conclude that they really might not be–particularly with new and impressive Android and Windows Phone 7 devices headed to market and Apple (AAPL) and Research in Motion (RIMM) both presumably working on refreshes of their iconic devices.

“Given the sizable discounts now prevalent on the Pixi, it now suggests that the real problems for the Pixi and the Pre go beyond insufficient carrier support and unfocused TV advertising campaigns,” CL King analyst Lawrence Harris observed in a research note to clients this morning. “Rather, consumers are not finding the Pixi a compelling product in an increasingly competitive smartphone market.”

If that’s truly the case, these Palm Brand Ambassadors the company is sending to Verizon (VZ) have their work cut out for them, at least at the moment. Sources close to Palm tell me the company plans to introduce at least one new smartphone this year. Perhaps that will be the device that drives demand and pushes the company back to profitability.

Team,

This morning we announced preliminary results for our 2010 third quarter. Since the quarter has not yet closed, it is too soon to offer exact numbers, but we stated that we expect to report revenues for Q3 between $300 and $320 million. We also announced that we expect our revenue for this fiscal year to fall below the guidance we gave to Wall Street, which ranged from $1.6 to $1.8 billion. As we mentioned in our press release, our softer than expected performance is due to slower than expected customer adoption of our products, which in turn has prompted our U.S. carrier partners to put additional orders on hold for the time being. On a positive note, we expect to exit the quarter with over $500 million in cash on our balance sheet. We’re scheduled to announce our full financial results in March.

I realize this news is difficult to swallow. We made this announcement today to prevent a surprise for Wall Street when we announce quarterly earnings in March. In the meantime, the entire executive team has been working extremely hard to improve product performance, and have implemented a number of initiatives to increase awareness and drive sales.

Dave Whalen and I just returned from a very successful meeting with Verizon Wireless, where they acknowledged that their execution of our launch was below expectations and recommitted to working with us to improve sales. To accelerate sales, we initiated Project JumpStart nearly three weeks ago. Since then, nearly two hundred Palm Brand Ambassadors, supplemented by Palm employees from Sunnyvale, have been training Verizon sales reps across the U.S. on our products. Early results from the stores have already shown improvement on product knowledge and sales week over week. You may have also seen a growing number of Palm ads on billboards, bus shelters, buses, and subway stations–all getting the word out about Palm.

All of these efforts are examples of how we are working to accelerate adoption and grow distribution of webOS. In the next few weeks, your management will work with you to make sure your priorities are laser-focused, primarily on helping to increase sales, improve product quality and differentiate the Palm product experience.

Our goals are taking longer than expected to achieve, but I am still confident that our talented team has what it takes to get the job done.

We’ll schedule an all-hands meeting after our earnings announcement in March, and I’ll be happy to answer your questions.

Go team!!!

jon

In his latest note, he halved his target price on Palm (PALM) to $10 and lowered his forecast for third-quarter handset shipments to 900,000, from 1.1 million, and his forecast for fourth-quarter shipments to 1.2 million, from 1.5 million.

“Palm’s superior platform features have not translated into sufficient carrier support and consumer demand, and we are concerned the window of opportunity may be closing as Google’s Android ecosystem gains ground, RIM revitalizes its portfolio, iPhone increases its presence, and as Microsoft reboots its efforts with Windows Phone 7,” Arya wrote in a research note. “With only $130 million of net cash in an opex intensive space, Palm’s options may be limited in our view.”

Analysts had been expecting $1.06 a share on $30 billion in revenue.

All in all, a strong quarter. PC shipments grew 26 percent year-over year. Server revenue rose 11 percent. And Personal Systems Group revenue was up 20 percent.

Looking ahead to its second quarter, HP (HPQ) expects non-GAAP earnings-per-share of $1.03 to $1.05 on revenue of $29.4 billion to $29.7 billion. The company also raised its revenue outlook for fiscal 2010 to between $121.5 billion and $122.5 billion from an earlier forecast of $118 billion to $119 billion.

“HP is well-positioned to outperform the market,” HP CEO Mark Hurd said in a statement. “The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook.”

“While it is way too early to make a call on the quarter, we believe the Jan. NPD suggests the quarter is tracking ahead of Street consensus,” Munster said in a research note issued this morning.

Just how far ahead? Munster figures Apple (AAPL) will likely deliver Mac sales of between 2.6 million and 2.8 million–up 18 to 26 percent this quarter and above expectations of 18 percent. iPod sales are also tracking well. Munster says they’re up five percent year-over-year, which is the first time they’ve been up YOY in 16 months, though he again cautions that it’s too early in the quarter to make an accurate call.

Piper Jaffray analyst T. Michael Walkley says he has been “slightly disappointed” with initial Palm (PALM) sales at Verizon (VZ), observing that sell-through so far has been at best “modest.”

RBC analyst Mike Abramsky is of a similar opinion. “Despite an initial first day ‘pop,’ Palm’s soft launch sell-through at Verizon was modest (ex 1-2/store/day),” he wrote in a research note to clients this week.

“However,” Abramsky elaborated, “as of Feb 9, checks show momentum steadily improving (now 3-4/store/day)….Broad awareness continues to be Palm’s challenge, with many unaware of Palm despite the marketing campaign. Some Verizon reps remain unfamiliar with webOS.”

Deutsche Bank analyst Jonathan Goldberg has also been unimpressed by initial sales of the Pre Plus and Pixi Plus at Verizon. He, like Abramsky, contends that more aggressive promotion from both Verizon and Palm is what’s needed to bolster demand.

“We have conducted a phone survey of 210 Verizon outlets in 38 states to gauge Palm and smartphone trends,” Goldberg explained in a client note issued this morning. “We have found that Verizon has yet to fully engage in promoting Palm products, however we did see a clear improvement as the survey progressed, indicative of ongoing training efforts.”

So Palm will be well-served with Verizon as a partner, but its challenge, as always, is one of awareness — particularly with expectations for a Verizon iPhone running high. Once it overcomes that, increasing carrier momentum should follow.

Quite a change from the profit of $1.24 billion, or 43 cents a share, the carrier reported in the quarter a year ago.

Analysts polled by Thomson Reuters (TRI) had been expecting earnings of 54 cents a share on $27.33 billion in revenue.

Revenue from Verizon’s (VZ) wireline services declined 3.9 percent to $11.5 billion. But data revenue rose 31 percent, to $16 billion. And wireless data revenue accounted for 32 percent of all service revenue, up from 26.5 percent a year earlier.

“Today’s 4Q results were eye-opening, if only because of the magnitude of the divergence,” Bernstein analyst Craig Moffet said in a research note issued after earnings. “Amidst an aggressive campaign to reinforce their positioning as the best-in-class network, and no doubt aided by AT&T’s well-publicized network travails, Verizon Wireless pulled away, with a solid 1.15M subscriber gain in post-paid and, more surprisingly, a huge opportunistic 1.0M subscriber gain in wholesale.”

But, Moffett cautioned, “…Wireline results were at least as weak as Wireless was strong, and Wireline remains the company’s center of gravity. Notable in the Wireline results were a worsening of trends in the legacy copper business and–perhaps worse–a serious miss in the growth of their FiOS business as well….Overall, we think the results must be judged as something of a disappointment.”

Verizon (VZ) dropped its nationwide unlimited voice plan to $69.99 a month from $99 and began offering a nationwide unlimited voice and text plan for $89.99.

But if you’d like a data plan to go along with them, you’ll be looking at additional fees–$9.99 for a 25-megabyte package and $29.99 for an “unlimited” one. The $19.99 data package option for 3G multimedia phones has been discontinued.

So what Verizon has really done here is cut the price of voice and raise, substantially, the price of data, as Pali Research analyst Walter Piecyk pointed out in a research note to clients this morning.

“This is 30 percent cut to voice and a 50% increase to data which effectively results in about an 8-10% effective cut to the more popular high-end rate plans,” the analyst explained.

“The rate moves appear to be trying to increase the perceived relative value of data,” Piecyk added. “There is in effect a price increase for data to $30 from $20, a level that most carriers have charged. Increasing prices is not a logical way to drive adoption but Verizon mitigates that increase with steep cuts in voice and appears to be using its industry leading position to move the perception on the value of data.”

One last point worth making here: Verizon’s new plans are more expensive than those offered by Sprint Nextel (S) and T-Mobile, but cheaper than AT&T’s–at the moment, anyway. The last time Verizon lowered its plan prices, AT&T (T) followed suit within a matter of hours.

The plans go into effect Monday, Jan. 18.

Below, some comparative tables on Verizon’s new pricing plans, courtesy of Pali (click to enlarge), and the official announcement:

VERIZON WIRELESS OFFERS SIMPLE, AFFORDABLE CONVENIENCE WITH NEW UNLIMITED VOICE PLANS
New Nationwide Plan Options Include Unlimited Talk and Text to Pair with Robust Data Plans on the Latest 3G Phones

BASKING RIDGE, N.J. – New monthly service plans from Verizon Wireless make connecting to the nation’s most reliable wireless network easier than ever. Beginning Jan. 18, customers may sign up for a new Nationwide Unlimited Talk plan that allows customers to call anyone in the United States for $69.99 monthly access or a Nationwide Unlimited Talk & Text plan to call and send text, picture and video messages to anyone in the country for $89.99 monthly access.

Nationwide Family SharePlans® will also have new unlimited options. Nationwide Unlimited Talk Family SharePlans will be $119.99 monthly access while the Nationwide Unlimited Talk & Text Family SharePlans will be $149.99 monthly access. All Family SharePlan pricing includes the first two lines of service. Standard text message rates will apply for customers on the Nationwide Unlimited Talk plans who do not sign up for a text messaging bundle.

Data Packages

The company also announced the expansion of the 25 megabyte for $9.99 per month data package requirement to include all Verizon Wireless 3G Multimedia phones, which gives customers quick access to Mobile E-mail, games and the Internet. The data package requirement was introduced last year with the LG enV® TOUCH and the Samsung Rogue™. Today’s announcement expands that list to include new activations of the LG Chocolate Touch™, LG enV®3, LG VX8360, Motorola Entice™ W766, Nokia 7705 Twist™ and Samsung Alias™ 2. The company expects to introduce a host of 3G Multimedia phones in 2010. The $19.99 data package option for 3G Multimedia phones has been discontinued.

Customers using Simple Feature phones (Mobile Web-enabled) will continue to pay $1.99 per megabyte or choose either the $9.99 or $29.99 data packages. The consumer data package for 3G Smartphones such as BlackBerry®, Windows Mobile® or Android devices will remain at $29.99 per month.

Prepaid Plans

Verizon Wireless will also offer customers new prepaid plans beginning Jan. 18. For those who prefer pay-as-you-go options, but want a no-holds approach to calling and texting, new Monthly Unlimited Prepaid plans will give customers the same great calling options as monthly contract subscribers for just $5 more per month. Prepaid Monthly Unlimited Talk is now available for $74.99 per month while contract subscribers pay $69.99 for the same unlimited calling option. Prepaid Monthly Unlimited Talk & Text will be available for $94.99 per month. The 450- and 900-minute Monthly Prepaid plans will also be available for $5 more per month than comparable postpaid plans.

Existing Customers

Today’s announcement will not have an impact on existing customer contracts, although customers may choose to move to any of the new plans. The company allows customers to change their service plans at any time without penalty or contract extension. To move to the newly announced plans, customers may go online to their My Verizon accounts at www.verizonwireless.com or contact Customer Service at 1-800-922-0204.

Reporting fourth-quarter earnings after market close Thursday, the company posted a profit of $2.3 billion, or 40 cents a share, compared with a profit of $234 million, or four cents a share, for the year-earlier period. Revenue was $10.6 billion, up from $8.2 billion for the same quarter in the year-earlier period.

A strong showing for Intel and one that blows the doors off consensus estimates that called for 30 cents a share in profit on revenue of $10.17 billion. And don’t forget that these results include a European Commission fine of $1.45 billion and a $1.25 billion settlement agreement with AMD (AMD).

“Curb your enthusiasm [for Intel]” Bank of America (BAC) analyst Sumit Dhanda told clients in a research note issued Wednesday that warned of a revenue miss from the chip behemoth. Curb your enthusiasm? Not likely after today’s results.

“Intel’s strong 2009 results reflect our investment in industry-leading manufacturing and product innovation,” Intel CEO Paul Otellini said in an earnings release. “This strategy has enabled us to generate unprecedented operating efficiencies while growing our traditional businesses and creating exciting new market opportunities, even in difficult economic times.”

Taking a wide view, Otellini adds, “Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world. Looking forward, we plan to deliver the benefits of computing to an expanding set of products, markets and customers.”

Looking ahead to the first quarter of 2010, Intel expects revenue of $9.7 billion, plus or minus $400 million. Evidently, the PC market is back.

Reporting fourth-quarter earnings after market close Thursday, the company posted a profit of $2.3 billion, or 40 cents a share, compared with a profit of $234 million, or four cents a share, for the year-earlier period. Revenue was $10.6 billion, up from $8.2 billion for the same quarter in the year-earlier period.

A strong showing for Intel and one that blows the doors off consensus estimates that called for 30 cents a share in profit on revenue of $10.17 billion. And don’t forget that these results include a European Commission fine of $1.45 billion and a $1.25 billion settlement agreement with AMD (AMD).

“Curb your enthusiasm [for Intel]” Bank of America (BAC) analyst Sumit Dhanda told clients in a research note issued Wednesday that warned of a revenue miss from the chip behemoth. Curb your enthusiasm? Not likely after today’s results.

“Intel’s strong 2009 results reflect our investment in industry-leading manufacturing and product innovation,” Intel CEO Paul Otellini said in an earnings release. “This strategy has enabled us to generate unprecedented operating efficiencies while growing our traditional businesses and creating exciting new market opportunities, even in difficult economic times.”

Taking a wide view, Otellini adds, “Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world. Looking forward, we plan to deliver the benefits of computing to an expanding set of products, markets and customers.”

Looking ahead to the first quarter of 2010, Intel expects revenue of $9.7 billion, plus or minus $400 million. Evidently, the PC market is back.