New Smartphone Pushes Up Palm Shares
{{#rendered}} {{/rendered}}Shares of Palm Inc. (PALM) rose more than 6 percent Thursday after the smartphone maker unveiled a trimmer, more affordable model designed to fight back against the onslaught of competition and attract more customers.
The Palm Centro is skinnier and lighter than its existing Treo cousins. At $99 with a two-year service contract, it is Palm's most inexpensive smartphone ever.
Sprint Nextel Corp. (S) will be the exclusive carrier when the product hits the market in mid-October, but Palm expects to expand the offering to other cellular networks after its 90-day exclusive period with Sprint ends.
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Over the past year, Palm's Treo, which pioneered the smartphone market, was considered a bulky beast as deep-pocketed rivals trotted out sleek new smartphones offered at $99, which undercut Treos and their price tags of $300 or more, depending on the model.
And though Apple Inc.'s (AAPL) iPhone is on the high-end of the market — costing up to $599 until Apple slashed the price to $399 — many analysts contend the newest smartphone rival has managed to usurp Palm's crown for user-friendly features.
{{#rendered}} {{/rendered}}Apple sold more than 1 million units within 74 days of the iPhone's launch. Palm has yet to sell that many Treos in a quarter.
Stephane Maes, Palm's vice president of smartphone product marketing, said the Centro reflects Palm's latest strategy to offer a variety of designs and prices to target different consumers — a change from its previous one-size-fits-all approach with the Treo.
"Not everybody wants the same thing and we know it has to get thinner," Maes said. "This is just the beginning."
{{#rendered}} {{/rendered}}Maes said the Centro, which weighs 4.2 ounces, will also serve as a bridge to Palm's next-generation operating system, which the Sunnyvale-based company is developing.
The Centro uses the Palm OS — a software platform that Palm officials acknowledge isn't optimized for today's multimedia demands.
Palm shares rose 97 cents to $16.40 Thursday. In the past year, the Treo maker's stock has traded between $13.41 and $19.50.
{{#rendered}} {{/rendered}}Faced with stiffening competition and rising costs, Palm's income for its full fiscal 2007 plunged by 83 percent on revenue that dipped 1 percent to $1.56 billion.
When Palm reports its fiscal first-quarter results Monday, the company said it expects to post a loss of a penny per share or break even.