Most handset stocks fell Friday, with Palm Inc. leading the downward movement after the company reported fiscal fourth-quarter results that missed analysts' views and posted an outlook that losses will continue in the first quarter.
Palm shares fell 65 cents, or 9.9 percent, to $5.89.
Late Thursday, the Treo and Centro maker said it swung to a fourth-quarter loss, and revenue fell compared with the same quarter last year.
Palm said sales of its low-price, low-margin Centro smart phone are strong but are being offset by slowing sales of higher-margin Treo devices.
Thomas Weisel analyst Matthew Sheerin said in a note to investors that Palm is "still a wait-and-see story."
He thinks Palm will not be profitable for at least two quarters and said that "competition in the high-end smartphone space will only get more difficult, with the likes of the new BlackBerry Bold and new models from HTC, Apple and others."
The analyst rates the stock "Market Weight" with a $6 price target.
Shares of rival Research In Motion Ltd. fell $4.47, or 3.6 percent, to $118.99.
RIM said late Wednesday that its fiscal first-quarter profit more than doubled but fell a penny per share short of what analysts expected.
In a note to investors, First Analysis Securities Corp. analyst Scott Pope said that in its earnings conference call RIM supported his belief that newcomers to the smart phone market "will not pose any serious threat to the company's near-term growth."
Meanwhile, American Depositary Shares of leading handset maker Nokia Corp. fell $1.19, or 4.8 percent, to $23.87, after hitting a new year low of $23.61.
Credit Suisse analyst Kulbinder Garcha downgraded the stock to "Neutral" from "Outperform" late Thursday in a client note and cut his price target almost in half for the company's Europe-traded shares.
Garcha predicted Nokia had taken 49.4 percent of the global smart phone market by 2007, but called this dominance "unsustainable in the near term" due to rising competition from Apple Inc., RIM and HTC Corp.
Motorola Inc.'s shares fell 4 cents to $7.26, while shares of iPhone maker Apple Inc. declined $3.62 to $164.64.
RBC Capital Markets analyst Mark Sue wrote in a note to investors that Apple's updated iPhone, which is slated for release in July and will cost $199, "is making carriers recognize that there's a new price ceiling for high-end smart phones."
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