Palm's Plunge Continues on Downgrade

NEW YORK (TheStreet) -- Palm's (PALM Quote) road to recovery has taken a sharp turn south now that Google's (GOOG Quote) Android phones at Motorola (MOT Quote) have given smartphone investors a new compass point.

Shares of the Pre phone maker have fallen 30% in the past month, capped by a 13% single-day drop Friday.

The stock price continued to fall Monday after Citi analysts downgraded Palm and BlackBerry maker Research In Motion (RIMM Quote) to sell and upgraded Motorola to a buy.

The move comes just five days before Motorola's Droid phone starts selling at the nation's No. 1 wireless shop, Verizon (VZ Quote). The slender, touchscreen Droid is Verizon's best attempt yet to counter Apple's (AAPL Quote) popular iPhone at rival AT&T (T Quote).

October was a rough month for Palm. The Pre phone has not been as big a seller with Sprint as expected. And Verizon, which expects to get the Palm Pre early next year, has invested its resources in the Motorola Droid, leaving tepid support at best for Palm.

Further undercutting the $149 Pre, Palm plans to start shipping the $99 Pixi smartphone to Sprint on Nov. 15, a potentially cannibalizing move from a Pre perspective.

Palm shares were down 1% to $11.48 in premarket trading Monday.