SAN FRANCISCO -- Those of you betting that Palm (PALM) will finish as one of 2009's top percentage-gainers continue to be in good standing.
But after a tripling of the shares in the past six weeks, it may be time for a dash of cold water, courtesy of
Palm's stock broke a 52-week intraday high earlier Friday, reaching as high as $9.51 before pulling back to $8.86, off 16 cents, in recent trading.
The latest spark was a note from the fine folks at Credit Suisse, who have jumped on the bandwagon of the company's eventual launch of its
device, which has brought Palm -- and its stock -- back to life in the wake of numerous oohs and aahs last month from the tech-gadget intelligencia.
Credit Suisse slapped a $11 price target on the shares, saying it expects upcoming Pre product and distribution announcements to drive earnings momentum, which will boost profit estimates and have the stock outperforming over the next 12 months.
(One has to keep in mind that when shareholders have seen their stock fall to $1.14 within the past two months, a long-term move to $11 from $9 is still cause for celebration.)
Palm's Pre is its bet-the-company shot at not yielding to the encroachment of
iPhone. Of course, it's no coincidence that the Pre offers touch-screen capability like the iPhone, nor is it a coincidence that the two companies have been sniping at each other through the media about "intellectual property."
In reality, however, Palm's best bet may be to outperform all of the latest iPhone wannabes: from
Research In Motion's
BlackBerry Storm, the host of handset makers building on
Android platform, and perhaps, somewhat unbelievably, future smartphones from
This is because the Pre essentially attracts two kinds of customers: those who are committed to
as a telecom carrier, and those who don't want to shell out for the iPhone ($199 for the cheapest version, plus the gouging AT&T data plan).
Palm hasn't announced pricing yet, but speculation exists that the company could offer the Pre for $149 or $199 with a carrier contract.
Unfortunately, both of those selling (or buying) points are increasingly shaky.
Actually, shaky sort of describes Sprint's business: the company said in its last earnings report in November that it lost 3.5 million wireless customers from a year earlier. Last month, Sprint said it would put
out of their jobs. Some customers, of course, will switch to Sprint for the Pre, but the outflowing trend doesn't inspire confidence for a hugely successful launch.
As for the iPhone, many Apple-watchers, who are now off Steve Jobs Health Watch, are expecting the company to offer a lower-priced, lower-frills version of the device sometime this year.
What is unclear is how new iPhone models will change the value proposition of the Pre (and, for that matter, the cannibalization of Apple's own products). Would a $99 iPhone still be more favored than a full-strength Pre?
But an interesting note on Friday from Kaufman Brothers analyst Shaw Wu almost makes that point moot. Wu suggests that AT&T, fearing lower profits, is reconsidering its strict stance against tiering its data-plan prices.
As too many iPhone subscribers have found out, it's largely AT&T's data plan that has made the 3G version merely a blockbuster hit instead of bringing it true ubiquity.
A move by AT&T to lower the
of being an iPhone user would in no way be a positive development for Palm and its Pre.
It will serve Palm shareholders well to keep an eye on both Pre and iPhone pricing changes in 2009.