Palm ( PALM) shares climbed steadily on Friday as investors shrugged off the company's widening third-quarter losses and looked ahead to the launch of the firm's eagerly awaited Pre phone. The smartphone maker, which is struggling to compete with Apple's ( AAPL) iPhone and Research In Motion'a ( RIMM) Blackberry, expects the Pre to breathe new life into its flagging sales. Clearly, this message is resonating with investors.
Even Palm's miserable third-quarter results, which were released late Thursday, failed to dampen enthusiasm for the company's stock. Palm's shares were rising 31 cents, or 4%, to $8.02, outpacing the broader decline in tech stocks that saw the Nasdaq slip 0.6%. Clearly, Palm is betting big on the Pre and its WebOS operating system, although at least one analyst warns that investors should not see the smartphone as some sort of silver bullet. Although he describes the Pre and WebOS as competitive offerings, Avian Securities analyst Matthew Thornton warns that Apple, RIM and Google ( GOOG) are all ramping up their efforts around smartphone hardware and software. "All eyes are on the Pre, but a few months from now, people will be saying that there's a next-generation Storm, Android and iPhone coming," he told TheStreet.com. "People have to be cognizant of that." He maintained his neutral rating for the company. Despite its partnership with Sprint ( S) to sell the Pre in the U.S., Palm faces an "uphill battle" to clinch carrier deals elsewhere, according to Thronton. "They don't have the brand recognition overseas that they have here," he said, adding that Palm also faces the challenge of luring developers onto its platform.