March 31 (Bloomberg) -- Palm Inc., whose stock has doubled this year on the buzz over its new Pre phone, may sell less than half as many devices as Apple Inc.’s iPhone did in its debut.

The Pre wowed visitors at the Consumer Electronics Show in Las Vegas this January with its WebOS operating system and wireless charger, winning the event’s top honor and pushing the stock up more than 80 percent over two days. Palm may ship 2.6 million in the first year, according to the median estimate of 10 analysts surveyed by Bloomberg.

Apple sold 6.1 million iPhones in the year after the 2007 debut, before the worst economic slump in a quarter-century sapped consumer spending. Palm, whose sales fell 71 percent last quarter, has neither the base of Apple devotees from which to draw nor the BlackBerry’s niche in the corporate world, said Andy Bateman, who leads the New York office of Interbrand.

“What the BlackBerry and iPhone did was to be game changers,” said Bateman, whose firm compiles an annual list of the world’s 100 most valuable brands. “As a brand, Palm is a little dusty. Coming from behind, it’s going to have to do an awful lot to make up the difference.”

The Pre received praise at CES, where event-goers cheered the unveiling and named the device “Best of CES.” Pre hype has since spread to the television airwaves through the phone’s March 9 appearance on Late Night with Jimmy Fallon, the comedian and talk-show host who marveled at the software that allows users to shuffle through applications like a deck of cards.

Palm, which enlisted Sprint Nextel Corp. as its exclusive U.S. carrier, said in January that the Pre will come out in the first half of the year. Spokeswoman Lynn Fox said it’s too soon to judge how many Pre phones Palm will sell in the first year.

Stock Rebound

Sprint, based in Overland Park, Kansas, will showcase the device at its “Pre VIP Lounge” at the CTIA Wireless trade show in Las Vegas this week.

Palm, whose stock plunged 42 percent in the year before the CES presentation, rose 13 cents to $8.59 at 4 p.m. New York time on the Nasdaq Stock Market. The 180 percent increase for this year is almost eight times Apple’s and compares with a 6.2 percent jump for Research In Motion Ltd., the maker of the BlackBerry phones.

Sunnyvale, California-based Palm faces a much more difficult economic environment than Apple did when it introduced the first iPhone. In the two years since, the U.S. economy entered a recession and consumer spending, which accounts for about 70 percent of the economy, fell at a 4.3 percent pace last quarter.

“Consumer demand two summers ago or even last summer was much better and was before the market started to tank,” said Matt Thornton, an analyst at Avian Securities LLC in Boston, who rates Palm “neutral” and doesn’t own shares. “So it does make things much tougher for Palm.”

Smart-Phone Growth

Sales growth of smart phones, which have Web and e-mail functions, will slow to 3.4 percent this year from 22 percent in 2008, according to IDC. That compares with the mobile-phone market overall, which will shrink for the first time since 2001, the Framingham, Massachusetts-based researcher said.

Apple, which now sells the iPhone in 80 countries, may ship 30 million units in the year beginning July 1, said analyst Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis. He recommends investors buy Apple stock and predicts the Cupertino, California-based company will introduce a new iPhone this summer.

Apple sold about 13.7 million iPhones over the past four quarters, more than quadruple Palm’s shipments over a comparable period. RIM shipped about 6.7 million BlackBerrys in its latest quarter alone.

Tom Neumayr, a spokesman for Apple, and Research In Motion representative Tenille Kennedy declined to comment.

Success Beyond Sprint

Palm sales will mainly be based on the Pre, Treo phones and any future WebOS devices, analysts say. The company needs to sell 5.5 million units annually to revive profits and 8 million to justify the current stock price, which will require “success beyond Sprint” in the U.S., said Tavis McCourt, an analyst at Morgan Keegan in Nashville, Tennessee.

Palm, which has posted losses for seven straight quarters, needs more partner carriers to translate anticipation for the Pre into the sales volume necessary to make the company profitable, said McCourt, who rates the stock “market perform.”

Gains Justified?

Palm has yet to name any foreign partners for the Pre and won’t say when the exclusive deal with Sprint expires. McCourt predicts Palm will sign Spanish service provider Telefonica SA for distribution in Europe and Latin America in the second half of the year. Telefonica spokesman Miguel Angel Garzon declined to comment.

Eric Rabe, a spokesman for Verizon Wireless, also touted as a possible carrier of the Pre, declined to comment.

Palm has “excellent options” when it comes to European partners, Palm Chief Executive Officer Ed Colligan said on a conference call March 19, without elaborating. The company is in a position to introduce the Pre “very successfully,” he said.

Palm is striving to recapture its reputation as a pioneer in handheld devices, sparked with the debut of the Pilot personal digital assistant more than a decade ago. Sales at Palm, which now makes the Centro and Treo phones, tumbled to $90.6 million in the quarter ended Feb. 27, underscoring the need for a hit product, said Jim Suva, an analyst at Citigroup Inc. in New York who rates the company a “speculative hold.”

“The Pre can’t launch soon enough,” Suva said.

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

Last Updated: March 31, 2009 16:07 EDT