NEW YORK (
paltry sales earn it a downgrade as the company's triumphant rebirth effort runs into more challenges.
"Our checks indicate weak sell-through at
after softer than expected marketing support and a weak ad campaign," Macquarie Securites analyst Phil Cusick wrote in a research note Tuesday, downgrading Palm to neutral.
The bleak assessment on Palm Pre and Pixi sales at Verizon effectively confirms a long running suspicion: The problem with Palm wasn't
, where Palm phones languished in an exclusive sales agreement last year.
Palm's up-from-the-ashes turnaround tale also illustrates the difficulties
face in a field of giants like
Research In Motion
Palm's travails also show that it takes more than a good phone to succeed in the mobile industry. Attributes like lots of cash, broad distribution channels and cooperation on custom phone features and design are a big plus for telco partnerships.
Telcos tend to pick favorites among their product partners, getting behind certain models with lavish, splashy promotions and strong in-store sales support.
Last year, as
, or was less than enthusiastic about the upcoming arrival of Palm phones. At the time, Google
and Verizon had been intensely focused on the launch of the
phone. Verizon had reportedly created an unprecedentedly large, $100 million ad campaign for the Droid.
The Palm phones arrived quietly at Verizon last month and the marketing push has been nearly absent. Cusick expects
, which gets the Palm phones in May, to be as equally ambivalent on Palm marketing.
"We expect AT&T to launch Pre and Pixi in April or May but with even less marketing support than Verizon," Cusick writes.
With Palm's turnaround gambit becoming more of a long shot, investors take flight. In early afternoon trading, Palm shares fell 7.46% to $8.42.
-- Written by Scott Moritz in New York.
>>Moto's Big Comeback
Follow our tech coverage on
and become a fan of