UPDATE: Palm Shares Rise On Citigroup Upgrade
January 12 2009 - 11:08AM
Dow Jones News
By Benjamin Pimentel
SAN FRANCISCO (Dow Jones) -- Shares of Palm Inc. rose Monday,
gaining on a Citigroup upgrade to hold following the tech company's
introduction of its new Pre smart phone and the potential it offers
as a "game changer."
The shares added nearly 11% at one point in morning trading but
gave much of this early advance back. They stood lately at $6.06,
up 1.7% on the session.
Citigroup analyst Jim Suva previously had rated Sunyvale,
Calif.-based Palm (PALM) as sell but raised his view to hold,
saying the company's newly introduced Pre smart phone "has the
potential to be an iconic handset."
"Pre looks like a game changer for Palm and [a] sell rating is
no longer warranted," Suva said in a research note. "With the
company's long-term viability in doubt, Palm debuted the best new
handset we have seen in quite some time."
Palm's new handset won rave reviews at the Consumer Electronics
Show in Las Vegas last week, giving the company some much-needed
credibility with a savvy and discriminating audience.
Still, Suva noted that Palm will likely continue to face
challenges in the handset market.
"Despite our enthusiasm for the Pre, we're still forecasting
significant operating losses in calendar year 2010 despite our
increase of estimates from this new product," Suva told
clients.
"Also, we think Palm could have a very rugged February quarter
and potentially tough May quarter until Pre is actually launched.
We think many carriers/consumers will wait for Pre rather than
order older Treos or Centro," he wrote.
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