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Palm Has Verizon in Hand: Analyst

Palm is upgraded to buy on strength of new beginnings with Verizon.



) --



has some good times ahead at


(VZ) - Get Report

, says Macquarie Securities analyst who upgraded the stock to buy Monday.

The bullish call comes after Palm shares have fallen 12% since Thursday when the company reported a big earnings miss.

The greater-than-expected losses were just the latest disappointment along Palm's bumpy recovery path. In September, Palm's growth prospects seemed considerably limited when

Verizon considered snubbing Palm

in favor of



Droid phone and a refreshed line of

Research In Motion



That scenario may have changed as it became apparent that the

Motorola Droid


not going to be the phone that finally slayed

the mighty

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iPhone. Throughout the past two months, Verizon has remained officially committed to selling the Palm phones early next year, when


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exclusive deal expires.


first reported that Verizon would likely take a minimum shipment of Palm phones and offer limited sales support for the devices. At the time, people close to the company said most of the marketing resources would be focused on the Motorola Droid.

Not so, says Macquarie analyst Phil Cusick.

"Despite market worries to the contrary, our checks indicate substantial support pending for Pre and Pixi at Verizon in early 2010," Cusick writes in his research note Monday.

Palm may have turned a corner on its troubles of 2009, Cusick argues. Spotty supplies of the Pre hampered its debut, and Sprint's weak support as the shrinking No. 3 player didn't help much, Cusick writes.

The still growing popularity of the iPhone and BlackBerry, along with the rise of


(GOOG) - Get Report

Android devices have all helped push Palm phones to the back of the smartphone pack. But Palm should fare better at Verizon, where it will have wider distribution and the support of bigger ad spending, Cusick predicts.

Palm is expected to talk up its post-Sprint opportunity with Verizon during an announcement at the Consumer Electronics Show next month in Las Vegas.

Palm shares, which are up 230% this year, rose 2% to $10.35 in early trading Monday.

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