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Palm Up on AT&T Pact

SUNNYVALE, Calif. ( TheStreet) -- Palm (PALM) swayed in the warm market breezes Thursday as Citi lifted its sell rating and regulatory monitors offered a sunny forecast that called for the Pre to arrive at AT&T (T - Get Report) in May.

Palm shares rose 3% to $9.89 in premarket trading Thursday on the uplifting news.

The move comes after a report Wednesday that showed Verizon's (VZ) torpid marketing support of the Pre and Pixi have made for a lackluster sales debut in the past two weeks.
Palm Pre
Palm Pre

Citi analysts upgraded Palm shares to neutral from sell Thursday. Also helping the bull case were reports that a Pre phone was under review at the Federal Communications Commission and scheduled to appear at AT&T on May 10.

Sprint (S) and Palm introduced the first Pre phone on June 8, just hours before Apple (AAPL - Get Report) unveiled its latest version of the iPhone. The Pre and its lower-priced sibling, the Pixi, have received critical praise but have failed to gain much popularity with consumers who have a host of touchscreen phones to choose from.

The spread of the iPhone and Google's (GOOG - Get Report) Android devices like the Motorola (MOT) Droid have helped push Palm back in line.

Palm is bleeding red and needs higher sales to turn the ship. Last year, Palm posted a net loss of $452 million on $323 million in sales. Analysts expect Palm to sell about 4 million phones this year -- if it has modest success at Verizon and AT&T.

--Reported by Scott Moritz in New York

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