Palm shares are down 20% this month, including a 4% drop today.
Concern that Google’s Android operating system is gaining ground at more carriers — at the expense of Palm and its new WebOS.
This morning, BMO Capital Markets analyst Tim Long downgraded Palm to “Underperform,” citing Android’s rise.
“In general, we believe Android will step up in importance at many operators, which, ex-Sprint, would put PALM in the position of fourth OS (AAPL, RIMM, Android) and sometimes even lower,” he said in a note today.
Long says shipments to Sprint peaked after one month, though the Pixi — coming next month — could provide “a small bump,” albeit cannibalising Palm Pre sales.
Meanwhile, Long expects Palm devices to ship at Verizon Wireless — the largest U.S. carrier — next year, but Verizon has recently indicated it will be putting a lot of its marketing weight between Android, including its “Droid” series. It also has a new, exclusive BlackBerry — the Storm 2 — to promote, and it could eventually sell (and promote) the iPhone. All of this is bad for Palm.
“Finally,” Long writes, “we believe Europe is off to a slow start and it will be difficult for PALM to build brand awareness.” This is a valid concern: While Nokia is historically the strongest there, Apple and RIM are catching up, leaving little room for Palm.
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