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Exclusive: Verizon Snubs Palm Pre

Updated from Thursday, Sept. 24

SUNNYVALE, Calif. ( TheStreet) -- Palm's (PALM) Pre phone isn't making the cut at Verizon (VZ - Get Report).

The Pre, Palm's premier touch-screen smartphone, which has been an exclusive offering this year at Sprint (S), had been scheduled to arrive at Verizon in January. But people close to the discussions say Verizon has decided not to support the Pre.

The move would be a dramatic setback for the up-from-the-ashes Palm story. The company desperately needs to secure more telco partners to sell its flagship phone. In addition to Sprint, Palm has named only Bell Mobility in Canada and Telefonica's (TEF - Get Report) O2 units in the U.K. and Germany as its exclusive partners.

Reached for comment on Verizon, a Palm representative says the company has never named Verizon as one of its partners.

If the snub is true, the move would also be a reversal of Verizon's position in May, when wireless chief Lowell McAdam told investors the Pre was coming in six months.

Palm Pre Smartphone

Verizon reps declined to comment.

Sources did say that Verizon could be more delicate about the decision and order just a small amount of Pre phones with no intention of lending much marketing support.

The reason for Verizon's change of heart on Palm has to do with several factors, say these sources. The fact that the Palm Pre has not been the blockbuster in sales that it was expected to be is one problem. To date, Sprint's fading No.3 status has not been compelling enough to get the Pre phone sales over the crucial 1 million-sold mark.

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