Pixi Dusts Palm with Delay: Report - TheStreet

SUNNYVALE, Calif. (TheStreet) -- Palm (PALM) shares plunged anew Tuesday as speculation swirled around possible delays of its Pixi phone at Verizon (VZ) - Get Report.

Shipments of Palm's Pixi phone were cut by 25% in the fourth quarter due to failed tests at Verizon, according to Taiwan's

DigiTimes

, which cited a report from China's

Commercial Times

. The shipments are expected to be rescheduled for sometime in the first quarter.

The fear of a crucial product delay at No.1 telco Verizon sent Palm shares down 3.61% to $10.16 at market close on Tuesday, down from Monday's closing price of $10.54.

Palm Pixi

After a lackluster run at

Sprint

(S) - Get Report

this year, Palm's hopes for rebirth now ride with Verizon, which is slated to accept and start selling the Pre and Pixi phones next month.

Investors have been concerned about Palm's ability to stay competitive with

Apple's

(AAPL) - Get Report

iPhone,

Research In Motion's

(RIMM)

BlackBerry, and a host of

Google

(GOOG) - Get Report

Android phones entering the market.

The

DigiTimes

report said total Pixi shipments were cut to 600,000 from 800,000 due to the snag at Verizon. If true, that could mean that Sprint will get the 600,000 and that Verizon will launch sales of the Pixi with less than a quarter million of the phones, a relatively small number given Verizon's 72 million customers.

Ever since Verizon, Google and

Motorola

(MOT)

teamed up on the Droid phone, Verizon's marketing focus has been largely devoted to the new exclusive Android device. With the tepid sales performance of the Palm Pre, Verizon has had only a limited interest in supporting the Palm phones next year, as

TheStreet exclusively reported

. The initial stocking of 200,000 Pixi phones at Verizon is likely to renew concerns that the phone company has a minimal commitment to the Palm phones.

Both Verizon and Palm representatives declined to comment.

-- Written by Scott Moritz in New York