PalmOne Watchers Waiting to Be Impressed

Shares of palmOne (PLMO Quote - Cramer on PLMO - Stock Picks) regained some lost ground on Monday, hours before the company is scheduled to release its first-quarter earnings report.

Wall Street expects the smartphone and handheld-computer maker to not only turn a sizeable year-ago loss into a substantial profit, but to top the company's revenue and earnings guidance. Investors may also be anticipating more news on the company's follow-up to its popular Treo 600 smartphone. Analysts expect the company to launch the Treo 600's sequel next month.

In a research note on Monday, Friedman Billings Ramsey analyst Chris Versace reiterated his "outperform" rating on palmOne shares and said he was looking for more information on the company's smartphone business. Increased shipments and sales of the company's Treo series are "key" to the company improving its financial results in the just completed and coming quarters, Versace wrote.

"We expect more details [on the upcoming smartphones] in the coming weeks," wrote Versace. "We suspect the pending models will have more favorable margins than the Treo 600," which, in turn, has better profit margins than palmOne's handheld computers, he added.

(Friedman Billings Ramsey does not have an investment banking business with palmOne.)

In recent trading, the company's shares were up $1.31, or 3.7%, to $36.96.

PalmOne's stock has largely recovered from a selloff that began late last month. Investors sold off the company's shares in response to new or potential competition for its Treo 600. The company's stock fell 11% on Sept. 8, for instance, after Research In Motion (RIMM Quote - Cramer on RIMM - Stock Picks) announced a new phone-shaped BlackBerry device that would sell for hundreds of dollars less than the Treo.

But in recent sessions, palmOne's stock has gained ground. It's now up 24% since its Sept. 8 close and about 214% so far this year.

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