As Eric pointed out a few weeks ago, Treo phone-maker Palm’s (PALM) latest gizmo, the “Centro” smartphone, has given renewed hope to fans of the beaten down PDA maker, driving up its shares by 13% or so in the last few weeks.
Tuesday, Pacific Crest analyst James Faucette writes of some signs of hope, glimmers of promise at the new Palm, which is on course to complete this month a financial restructuring organized by private equity firm Elevation Partners. Says Faucette, the Centro, selling at Sprint (S|) for a budget price of $99.95, is doing quite well and not cannibalizing the company’s higher-priced Treos as much as he’d feared: “Our retail sell-through checks for the first weeks of availability indicate solid sell-through. We also believe that Centro cannibalization of the higher-ASP Treo is around 30%, versus our previous expectation of 50%.”
And Jon Rubinstein, who was key in the development of Apple’s (NASDAQ:AAPL) iPod, “will have a major role in the company’s new product development. We think this may have a positive impact on Palm’s R&D efforts, which is important as Palm develops its new Linux-based operating system.” Nonetheless, Faucette is keeping his Sector Perform rating on Palm until there’s evidence the Centro and other new products have restored Palm’s competitiveness, he writes.