Sprint Seeks Salvation in Smartphones

Could Palm's (PALM) eagerly-anticipated Pre phone breathe new life into Sprint (S)?

The telecom giant will be the first wireless carrier to offer the smartphone when it debuts during the summer, a move which it hopes will rejuvenate its flagging business. The No. 3 wireless player has seen millions of customers jump ship in the past four years after an ill-fated merger with Nextel and is looking for a big smartphone boost.

Sprint, which lost 4.5 million subscribers and swung to a $2.8 billion loss last year, is facing stiff competition from rivals AT&T (T) and Verizon (VZ), hence the significance of the Palm Pre announcement.

Sprint's biggest challenge is attracting subscribers to its network, so offering the Pre is a smart move. Touted as a possible challenger to Apple's (AAPL) iPhone and Research In Motion's (RIMM) BlackBerry Storm, the Pre features a touchscreen and Palm's new WebOS operating system.

A recent report by Deutsche Bank analyst Jonathan Goldberg suggested that Sprint may even ship the Palm Pre earlier than June 30.

The phone also makes an appearance in Sprint's latest TV ad, part of an ongoing advertising blitz.

"Sprint is aggressively investing in rebuilding its brand," wrote Craig Moffett, an analyst at Sanford Bernstein, in a recent note, explaining that the firm significantly increased its spending on network TV advertising during the fourth quarter.

Clearly Sprint has high hopes for the Pre phone, which has helped drive the company's stock during the last few months. Since the end of last year, the firm's shares have risen more than 100%, and the stock closed at $4.41 Monday.