LAS VEGAS -- Palm ( PALM) finally got its much-awaited Treo 750 smartphone out the door, but that may be a small victory for the handheld device maker in an increasingly competitive market. The Treo 750 phone arrives in Cingular Wireless retail stores and online Monday after a two-month delay that was largely responsible for the handheld-device maker's cutting earnings expectations during its second quarter. The news from the annual Consumer Electronics Show here should be a relief to investors who were jolted when Palm
slashed its earnings estimates on Nov. 27, resulting in an 8% drop in the company's share price. Palm had blamed it on the failure to complete a certification for the phone by a wireless carrier. Shares of Palm were up 12 cents or 0.8% to $14.81. Getting the Treo 750, which runs Windows Mobile, into the hands of consumers should help Palm's third-quarter earnings, but it's unlikely to boost the company's long-term prospects. Analysts expect to see revenue of $403.93 million in the third quarter and earnings of 12 cents a share. Palm faces an increasingly difficult market for mobile devices. Nokia ( NOK) also on Monday introduced the N76 slim phone that combines a sleek design with complete multimedia capability that includes music and photos. Nokia also introduced the N800 tablet device with access to RealNetworks' ( RNWK) Rhapsody music service and Skype ( EBAY) Internet calling.
The N76 is expected to start shipping in the first quarter of 2007 at an estimated price of $500; the N800 tablet, which uses Linux, is now available for $399. Meanwhile, Palm has priced its Treo 750 at $399.99 with a two-year contract and mail-in rebate. However, consumer attention has mostly centered around Research In Motion's ( RIMM) BlackBerry Pearl and Samsung's BlackJack phone. The two compete closely on the basis of their devices' sleekness and thin design. And that's where Palm comes up short, having yet to satisfactorily deliver on consumers' desire for greater phone functionality and slimmer design. Palm's Treo 750, while an improvement over its earlier line of chunky phones -- it has an internal antenna and soft-touch finish -- still doesn't beat rivals when it comes to design. What Palm is counting on, though, is the phone's ability to work across international networks. The 750 enables users to access networks in Europe and Asia, says Palm. That's why the company is positioning the phone as the gadget for business users, a market where RIM's BlackBerry dominates. The business user will be even more difficult for Palm to capture, wrote Casey Ryan, analyst with Nollenberger Capital Partners, in a recent research report. "Palm is continuing to struggle to gain recognition and mind-share in the corporate market for PDAs but is doing better in the consumer marketplace," wrote Ryan, whose company does not own shares or have an investment-banking relationship with Palm or RIM.