(Updates with closing stock price)
NEW YORK (
was slapped with a sell rating Tuesday on concerns that the new arrivals in the smartphone market will crowd out the Pre.
is facing a significant challenge as telcos like
Research In Motion
and phones built on the
Android operating system, shoving Palm into fourth place among suppliers, writes BMO Capital Markets analyst Tim Long in a research note Tuesday.
The downgrade comes a day ahead of Verizon's introduction of the
running on Google's Android system. It also follows a report earlier this month by
that Verizon was
next year and putting its full support behind Android and BlackBerry phones. Verizon has said it plans to offer the Palm Pre and Pixi phone early next year.
Google also has plans as
, to bring its own an Android phone to the market as early as this year.
The heavy competition and the fading popularity of the Pre phone along with the potential cannibalization of Pre by the Pixi next month does not bode well for Palm, Long notes.
"We believe that the company will miss its guidance for the second half of fiscal 2010," writes Long.
Palm shares closed Tuesday trading down 6.3% to $13.38.