Sprint Shares Skyrocket 20% on Palm Pre Deal
Sprint [PALM Loading... () ], which also reported a narrower-than-expected quarterly loss on Thursday, saw its shares rise leap almost 20 percent to $3.25 Thursday. — The person, who asked not to be named, said the exclusivity period …
Context & Ripple Effects
By early 2009 Sprint was bleeding subscribers and posting losses, so the market seized on any catalyst for a turnaround. News of a Palm Pre deal with an exclusivity window and confirmed pricing gave investors one — the stock jumped nearly 20% to $3.25 on the same day Sprint reported a narrower-than-expected quarterly loss. The rally was a bet that a hot exclusive handset could do what years of price cuts had not.
First-order effects
- Sprint shareholders get an immediate repricing: shares leap almost 20% to $3.25 as traders bet the Pre can slow subscriber churn, even though the underlying quarter still showed a loss.
- Palm gains a guaranteed flagship carrier at launch, while Sprint's rivals are left scrambling to respond to the first credible webOS device hitting the market.
Second-order effects
- If the Pre sells, competitors like Verizon and AT&T face pressure to either court Palm for non-exclusive distribution or push their own smartphone lineups harder — a dynamic analysts watched closely when they later judged the launch a success and eyed inventory replenishment.
- Sprint becomes dependent on a single device franchise; any supply or marketing stumble converts directly into churn risk, which is exactly what surfaced months later with Palm's channel and distribution troubles.
Third-order effects
- The episode is a case study in exclusivity economics: carriers paying up (or conceding terms) for device exclusives to differentiate commodity networks — a playbook that peaks here before platform ecosystems like Apple and Android made single-device exclusives less decisive.
- For struggling carriers, hardware partnerships become the core turnaround lever rather than pricing alone — but the eventual cancellation of some Sprint Pre promotional offers foreshadows how fragile device-led recoveries prove when the partner vendor weakens.
The trend: This is one data point in the late-2000s shift where wireless carriers increasingly pinned their fortunes on exclusive smartphone hardware rather than network or price differentiation — a strategy whose limits the Palm-Sprint partnership itself would soon expose.