Verizon to sell Palm Pre, new BlackBerry phones

NEW YORK Thu May 28, 2009 4:33pm EDT

Customers line up outside of a Verizon Wireless store to purchase the new Blackberry Storm phone in New York, November 21, 2008. REUTERS/Brendan McDermid

Customers line up outside of a Verizon Wireless store to purchase the new Blackberry Storm phone in New York, November 21, 2008.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Palm Inc's PALM.O iPhone competitor Pre got an unexpected boost on Thursday as No. 1 U.S. mobile service Verizon Wireless said Pre would be part of its upcoming device line-up, sending Palm shares up 8.8 percent.

Palm is depending heavily on Pre to revamp its own business and regain market share from rivals such as Apple Inc (AAPL.O). Pre is also seen as key to helping stem customer losses at Verizon's smaller rival Sprint Nextel Corp (S.N), which is launching the Pre exclusively on June 6.

Verizon, the No. 1 U.S. mobile service, will offer Pre in the next six months or so, company Chief Executive Lowell McAdam said during a conference webcast.

Verizon Wireless said its phone line-up would also include a new version of the touchscreen controlled BlackBerry Storm from Research In Motion Ltd RIM.TORIMM.O and a new BlackBerry called Tour. Also slated are devices from Motorola Inc MOT.N and phones based on Android, the Google Inc (GOOG.O) mobile system.

"Over the next six months or so you will see devices like Palm Pre and a second generation Storm," on the Verizon Wireless network, McAdam said. "You can expect to see us launch a steady stream of new devices from multiple vendors."

Some analysts had worried that Palm was limiting Pre's success by forging an exclusive agreement with Sprint, which lasts at least until year end, as first reported by Reuters in February and confirmed by Sprint on Thursday.

As a result, UBS analyst Maynard Um said Verizon's Pre news was encouraging for Palm investors. But the analyst predicted increasing competition in the advanced phone market, saying that Motorola "could be the wildcard in the smartphone race" as it has the potential to be most aggressive on price.

"However, visibility in an increasingly competitive market is still limited," the analyst said in a research note.

Um also said he expects other new Palm phones based on the same operating system as Pre. For example Randall Stephenson, the chief Executive for AT&T Inc (T.N), the No. 2 U.S. mobile service, had said during a conference on Wednesday that his company would also like to sell Pre but he did not give a timeframe. AT&T uses a different network technology to Sprint.

The comments come ahead of Sprint's long-awaited Saturday, June 6, launch of Pre and the expected announcement of a new iPhone from Apple in the week after that.

Top executives from both Palm and Sprint have said they expect Pre shortages around the launch because of strong demand.

McAdam's announcement was also a boost for Motorola Inc MOT.N, which has been steadily losing market share and is pinning its hopes on the launch of a new line-up of advanced phones based on Android later this year.

AT&T is the exclusive U.S. provider for iPhone and derives much of its customer growth from the wildly popular and much imitated touchscreen device.

Verizon's McAdam said that multiple device launches for the rest of this year would ensure his company is not be dependent on any one phone for keeping customers and winning new ones.

Verizon Wireless is already the exclusive U.S. carrier for the first BlackBerry Storm launched by Research In Motion RIM.TO late last year. While reviews of the first Storm were mixed, Verizon had said January 28 that it had sold 1 million phones since the device's November 21 launch.

McAdam said Verizon Wireless said Tour would be a new upscale BlackBerry, that that company expects to sell along with Storm in the next six months or so.

RIM had said earlier this month that it was planning a new edition of Storm to help it push into the consumer market but it had not announced a timeframe.

Verizon rose 32 cents to close at $29.27 and Sprint was up 7 cents at $5.14, both on the New York Stock Exchange. On Nasdaq, Palm rose 93 cents to $11.46 and RIM's U.S. shares were up $3.01, or 3.9 percent, at $80.30.

(Reporting by Sinead Carew and Franklin Paul; Additional reporting by Alexei Oreskovic in San Diego; Editing by Tim Dobbyn, Richard Chang)

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