Ahead of the Bell: Palm shares rise

Shares of Palm Inc. rose ahead of regular trading Tuesday after Kaufman Bros. said worries about competition for the company's "smart" phones are overdone.

Kaufman analyst Shaw Wu raised his rating to "Buy" from "Hold," helping Palm shares up 37 cents, or 3.1 percent, to $12.22 in premarket trading.

Palm introduced the touch-screen Pre this year to compete with Apple Inc.'s iPhone and added the smaller, less expensive Pixi this month. But it faces growing competition, especially from new phones powered by Google Inc.'s Android software. Motorola Corp.'s Droid, sold by Verizon Wireless, is the latest threat.

Wu said he remains "concerned with competition and profitability" but added that "sentiment has gotten overly negative."

Palm shares have fallen 32 percent from the beginning of the quarter, closing Monday at $11.85.

Wu predicted Palm will end its exclusivity with Sprint Nextel Corp. next year, adding Verizon Wireless as a carrier. That would expand the company's potential customer pool.

He also called Droid sales "somewhat disappointing."