Palm Faces Intensifying Smartphone Market

Forbes.com covers a recent research note from Piper Jaffray's T. Michael Walkley that "maintained a "market perform" rating on Palm, citing strong Treo sales but expecting the company to see near-term pressure from increasing competition." Walkley wrote, "We believe Palm is well positioned to take advantage of what we believe will be strong growth for the high-end converged smartphone market. However, based on the current share price we maintain our 'market perform' rating and price target of $25."

Based on monthly handset channel checks, Walkley remarked, "Palm Treo sales were solid in North America during April. However, his checks also indicated increasing competition from HTC and Research in Motion's BlackBerry at GSM carriers." Walkley also commented that "the Treo 700w continued to see strong sales at Verizon (nyse: VZ) Wireless stores," and "suggested sales of the Treo 650 at Cingular may have lost share and slowed during the month of April as HTC's 8125 enjoyed strong demand at Cingular stores with several store managers indicating this new smartphone was sold out due to strong demand."

On a more positive note from the Cingular channel, Walkley pointed out that "several store managers expected a 700 version of the Treo at Cingular stores later this summer." He said, "We believe the launch of this product should improve Treo sales at Cingular."

At Sprint (nyse: S ), Walkley indicated "slower sales at Sprint [for Treos] than other carriers. At T-Mobile, checks indicated strong sales for the HTC MDA smartphone and the BlackBerry 8700, indicating solid demand for smartphone products at this carrier."