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Updated from 7:29 a.m. EDT

With investors and fans whose faith borders on the religious, and astock price at a new nadir, any nugget of news may provide some relief for



and the handheld sector at large.

That news may come this morning in announcements that PalmSource, thesoftware division of the company, has rushed out the final version of itsnext-generation operating system to software developers, beating its summertarget by two weeks. Separately, it also plans to launch a version of thesystem in China within a year, aiming to bite off 20% of the market in theregion.

Palm shares surged in pre-open trading, up 16 cents, or 13.11% to $1.38.

Padding the announcement, the company also plans to name theoperating system's new licensees, joining the ranks of









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, and it also will mark theintroduction of a new products category, according to PalmSourceexecutives.

It's an important development in Palm's fiscal cycle as it banks on itssuccess for a return to profitability. Called OS 5, the new operatingsystem will include native support for snazzier audio and visual functions,and bolster security features. It also will provide better support forcommunications-related functions including phones and data devices and forhigh-speed wireless 802.11 networks, known in the tech industry as WiFi.

Perhaps as important to its long-term value was the downplayed news ofthe company's intentions to enter the fractured Chinese market, meant to offset adepressed demand for such devices in the U.S., at least for now.

Palm's OS 5 features have been known for months. And granted, Monday'sdeclarations will be subtle to amount to any solid market-moving news. Butgiven the pounding that wireless and handheld stocks took last week,practically any morsel of positive information may instigate some form of arelief rally. Industry analysts cautioned that any uptick likely would besmall at best.

Last week Palm and Handspring stocks were dragged down with the rest ofthe tech sector after


and the semiconductor industry wereslammed by a Merrill Lynch downgrade. In the prior week, Palm warned itwould fall below current quarter sales estimates by 20%, bringing in $230million, instead of an earlier projection of $290 million to $300 million.It also pushed out profitability to the end of the year.

Since Palm's warning on May 30, shares have lost nearly half of theirvalue, plunging $1.10, or 47%, to a new all-time low of $1.22 on Friday'sclose. Palm licensee Handspring lost 69 cents, or 32.8% of its value, toclose last week at $1.41.

Analysts, who applauded news of the new OS capabilities earlier thisyear, question how much upside they will bring to Palm's shares. New Yorkhedge fund Bluewater Capital's Brian Blair, considered a Palm bear, saidthat many of the operating system's new features have made an appearance onsome level over the past year on hardware from Palm's competing licensees.

Sony, for instance, has developed an executive master toy, rolling abuilt-in camera, keyboard, MP3 support and video player into its new rangeof Palm-based devices. Handspring, too, has evolved Palm's code into ahybrid organizer/phone. "Has

that spurred sales so far?"Blair asked. "Maybe a little. But not enough to bolster

Palm'sown sales. This particular announcement on Monday is 100%meaningless until the

new product is on theshelf and there's some evidence of sell-through."

"The more important thing," added Gartner Group analyst Todd Kort, "iswhen devices actually get delivered, which is not this summer." To date,Palm has not committed to a definite time frame for when new devices willbe released by itself or by licensees, with some analystsguessing the first may come by November.

The company has been quietly on the mend in the past week. It announcedit was giving away its low-end organizer, the m105, with purchases of aslightly more expensive entry-level m500 as part of a Father's Daypromotion.Observers said the move was meant to pare down excess inventory, a stickingpoint in its midquarter guidance.

Palm executives told analysts thecompany had ended the quarter with approximately nine weeks of inventory,up from a projected four to eight weeks. In response to a question, PalmCEO Eric Benhamou maintained that a price war during the summer is notlikely.