Verizon Sprinting Away From the Pre?

Is Verizon's (NYSE: VZ  ) wireless group backing away from its earlier commitment to carry Palm's (Nasdaq: PALM  ) Pre smartphone? Conflicting reports have made this question harder to answer today.

Late yesterday, Scott Moritz of TheStreet.com reported that Verizon had decided, "not to support the Pre." Bloomberg followed up this morning by citing a Palm spokesperson who reiterated the company's plan to offer the Pre through multiple carriers, beginning in the second half of fiscal 2010. Sprint Nextel (NYSE: S  ) is expected to remain the Pre's exclusive carrier through December.

What's to come in the new year is what worries investors, who sold off Palm by almost 5% yesterday. I can appreciate their concern. Sprint Nextel is fine, but Verizon and AT&T (NYSE: T  ) are the biggies, and Ma Bell already has an exclusive deal for Apple's (Nasdaq: AAPL  ) iPhone. Verizon, meanwhile, has a history of signing exclusive deals for varying flavors of Research In Motion's (Nasdaq: RIMM  ) BlackBerry.

Palm could be stuck with Sprint at the worst possible time. The company just issued 20 million new shares of stock at $16.25 apiece, raising $359.9 million (including the over-allotment option). Investors who bought at that price had to be counting on a wider distribution network for the Pre.

Then again, all of this could be needless arm-waving. Talk of Nokia pursuing Palm hasn't led anywhere, and my own speculation -- that Microsoft (Nasdaq: MSFT  ) would make for a decent suitor -- is likely premature.

Maybe the simplest answer to the Palm-Verizon question is that they're still talking, and we'll know more when we know more. Would that really be so shocking?

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Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is like hot chocolate on a cold day.


Read/Post Comments (5) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 25, 2009, at 4:34 PM, catoismymotor wrote:

    I bet is has something to do with that creepy monochromatic woman in their ads.

  • Report this Comment On September 25, 2009, at 4:36 PM, nebluray wrote:

    I feel sorry for the poor writer that always bet on wrong side of this stock since 6mo ago. It down 5% for yesterday. However, the guy never mention it was up more than 20% several days ago.

    Please going to somewhere to find a better job that may suite for you!

  • Report this Comment On September 25, 2009, at 9:39 PM, AZ123 wrote:

    TheStreet.com's article touched upon what, I believe, is the key to the Verizon/Pre deal: revenue from downloadable applications. That's where the money is.

    Verizon wants its V-Cast video and applications available on all phones they distribute. Palm is about to launch their own applications store, making money from downloadable apps like the iPhone does.

    Verizon probably wants a piece of that money if Palm balks at carrying V-cast and Verizon's other apps. So, verizon floats that rumour in order to get Palm and its shareholders nervous.

    But here's the thing: this rumour wasn't reported on Cramer's show or CNBC or Fox Business channel, so that proves to me that this is about manipulation.

    Palm's current stock price, a day after the online article, remains well above $16/share.

    Wouldn't the price have plummeted today???

    Verizon is the company that first enthusiastically talked about carrying the Pre in early 2010 and Palm's Web OS wasn't an issue then. So, I don't buy that as one of the reasons mentioned in the article.

    The Pre carries Sprint's web video equivalent to Verizon's V-Cast, so V-Cast on the Pre wouldn't be an issue either, despite that, too, being a problem according to the article.

    No, this is all about Palm and Verizon arriving at a mutual agreement on how much money each will receive from whichever applications store they settle upon.

    More than likely, Palm will adopt V-Cast video and Verizon will get a share of any Palm applications from Palm's apps store.

    This is public posturing by Verizon, especially so close to the new year.

    It's all about getting a piece of the pie...and both companies won't walk away hungry with food left on the plate...

    Peace out.

  • Report this Comment On September 27, 2009, at 8:00 PM, zimmmatt wrote:

    The rumor of Verizon Wireless passing on adding the Palm Pre to its line-up is totally and 100% bogus.

    http://www.boygeniusreport.com/2009/09/25/confirmed-verizon-...

  • Report this Comment On September 28, 2009, at 1:44 AM, AZ123 wrote:

    Good lookin' out, Zimmmatt!

    This article's writer, as well as another Fool writer, constantly jump the gun and exaggerate false information, unconfirmed rumors and use personal bias to always try to undercut Palm. They're classic Palm haters who aren't to be taken seriously.

    It's important to always counter their false claims and analysis with logic and truth.

    I wish they could be more professional and honorable but obviously, that's not their mission.

    Peace out.

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