RadioShack drops Sprint's Palm phones

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Sprint Nextel (NYSE: S) confirmed RadioShack is phasing out Palm's webOS products from store shelves, the latest blow to the beleaguered smartphone maker.

Sprint spokesman Scott Sloat said the retailer will drop the Palm Pre and Pixi in favor of two other devices. "This is in line with RadioShack's normal product planning process--there is a designated amount of space in stores for handsets and they work to keep the lineup of devices as current as possible," Sloat told Barron's. "The plan is for the Pre to be replaced by a BlackBerry device and the Pixi for a message-centric device. At this point, that is as detailed as I can be."

Sprint launched the Pre in June and introduced the Pixi in November.

Interestingly, RadioShack's own spokeswoman, Wendy Dominguez, was noncommittal on the topic.

"For competitive reasons we don't comment on inventory numbers," she told FierceWireless. "Palm has been a good partner in our growing mobility business and we expect that relationship to continue."

Verizon Wireless began offering Palm devices in January, and recently reduced the prices for the devices, though Verizon phones are not available through RadioShack.

Palm's stumbles in RadioShack top a rough month for the company, which has been struggling with falling revenues and slipping smartphone sales. Indeed, Palm confirmed in a regulatory filing that Michael Abbott, the company's senior vice president of software and services, resigned effective April 23. The filing, made with the Securities and Exchange Commission, also said the company will implement a retention program for key employees, including executives, offering equity awards and cash bonuses to employees who stay with the company for two years.

Recent reports indicate Palm has put itself up for sale, though one analyst saw Abbott's resignation as a sign that Palm may continue on its current track.

"We believe the timing of the resignation likely indicates that an acquisition is not pending and the retention actions reflect the challenges Palm is facing internally," UBS analyst Maynard Um wrote in a research note. "We believe any potential acquirer would likely want (and need) the webOS development team."

For more:
- see this Barron's blog post
- see this Reuters article

Related Articles:
Palm software head Michael Abbott resigns

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