Shares in the handset maker fell some 23 percent last week amid concerns about increased competition from Google’s (GOOG) Android operating system, which is being rolled out on a number of devices at a variety of carriers, including Palm partner Sprint (S).

This morning, analysts at Citigroup (C) cut their recommendations to sell from hold on Palm (PALM) while simultaneously raising their rating on Motorola (MOT) because of its “compelling” new Android handset, Droid.

“Motorola is launching of one of the most compelling offerings at [a] time when many investors have given up on the company’s handsets,” Citigroup analyst Jim Suva wrote in a research note.

“The revolution of product and application service offerings,” Suva added, “is going to start to crack open the enterprise door and could pose a risk for BlackBerry. Major shifts in promotion support creating a promotion commotion in the months ahead favor Motorola and post a challenge for RIMM and PALM.”

Over at CL King, analyst Lawrence Harris is similarly dubious of Palm’s prospects in the months ahead. Noting that Sprint executive David Owens said last week that the carrier plans to peddle a number of new Android devices from HTC next year, Harris sees unfavorable implications for Palm.

“Historically, Sprint has been Palm’s largest customer. Indeed, in the August quarter Sprint accounted for 85 percent of Palm’s revenues,” Harris wrote in a note to investors. “In FY09 (May) Sprint represented 43 percent of total Palm sales. Sprint has a U.S. exclusive on both the Pre and the Pixi through calendar year end. The Pixi will be launched at Sprint on November 15 for $99.99. The Pixi is fairly similar to the $149.99 Pre. Verizon has stated that it will begin offering the Pre in early CY10.”

Expounding on his analysis, Harris notes that “According to a report on Mobile Today, a U.K.-based publication, initial sales of the Pre through Telefonica’s O2 unit in the U.K. have been slow. If this report is correct, than the bulk of Palm’s sales over the next few months will probably continue to be generated through Sprint.”

That Sprint will soon add some slick new Android handsets to its lineup is worrisome, then, indeed. For Palm, it seems, driving conditions on the road to recovery are looking increasingly hazardous.

Among the upgrades: A slimmer design, a 3.2-megapixel camera, sharper 360-by-480 display, 802.11b/g Wi-Fi support and an optical trackpad similar to that of the BlackBerry Curve 8520. The new handset is also outfitted with a 624MHz processor and 256 MB of flash memory.

Paired with BlackBerry OS 5.0, this should mean some decent performance gains. So an incremental update, but little more. Said RIM co-CEO Mike Lazaridis: “This is the Bold for those that wanted it just a little smaller, but still wanted the Bold look, feel, performance and materials.”

No wonder it was a blowout quarter.

After market close Monday, Apple reported a fiscal fourth-quarter profit of $1.67 billion, or $1.82 a share, on revenue of $9.87 billion. That topped the estimates of analysts surveyed by Thomson Reuters, who’d expected the company to earn $1.42 a share on revenue of $9.2 billion.

The company sold 3.05 million Macs during the quarter, a 17 percent increase over last year. It sold 10.2 million iPods, an eight percent decline from the year-ago quarter.

And iPhones? Apple (AAPL) sold 7.4 million of those–seven percent more than during the same period last year. So much for those supply-chain issues that some analysts warned might undermine iPhone sales.

“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said CEO Jobs. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.” [Editor's Note: "...really great new products"--is that code for a tablet?]

Apple shares, which closed at $189.86 today, are spiking as I write this. At $203.90, they’re up more than seven percent in extended trading.

Looking ahead to its fiscal first quarter, Apple estimates it will earn between $1.70 and $1.78 a share on revenue in a range of $11.3 billion to $11.6 billion. That’s comically lower than the $1.91 a share on $11.45 billion in sales that analysts are forecasting. But as today’s results clearly demonstrate, Apple subscribes to the underpromise-and-over-deliver school of guidance theory, so there’s likely little cause for concern.

So, to recap: Apple sold more Macs and more iPhones than in any previous quarter in the company’s history. Before the holiday quarter. And in midst of the worst economy we’ve seen in 50 years.

Notes From the Earnings Call:

• Apple COO Tim Cook and CFO Peter Oppenheimer are handling the earnings call. CEO Steve Jobs will not be attending.
• Oppenheimer says this was Apple’s second-highest quarterly revenue ever. Highest-ever operating margin. “We are thrilled with these record-breaking results, particularly given the economic environment around us.” Obviously.
• Macs are showing “fantastic momentum,” says Oppenheimer. Sales have outpaced the market in 19 of the past 20 quarters. Quarterly sales were up 17 percent; portable sales, 35 percent. Interesting: 42 percent growth in Asia.
• Moving on to iPods: Sales were down to 10.2 million from 11 million a year ago. But iPod touch sales doubled. MP3 market share in the U.S. is now more than 70 percent (according to NPD, I think).
• iPhone sales were up seven percent. Apple will begin selling iPhones in China later this month. More than 85,000 apps in App Store. Two billion downloads.
• Apple opened 15 new stores during the quarter. Now has 273. Will soon open first two stores in France, including one at the Louvre.
• Moving on to the Q&A. Asked about those iPhone 3GS supply issues I mentioned earlier, Cook acknowledges that demand did outstrip supply in a number of countries. But the situation improved “markedly” in September. How are things looking for China? Cook: “I would have liked to have had more, honestly, because we were still short in some countries at the end of the quarter.”
• Apple is obviously very excited about the iPhone’s impending debut in China. “There’s a good opportunity, and we’re really excited to get started,” says Cook. “It’s the largest market in the world in terms of total phones.”
• No comment on the broader economy. “We just spend our time projecting our business and leave the economy to the economists.”
• Does Apple worry about iPhone rivals? Android? Not really, says Cook. “We feel very good about suiting up and competing against anyone.” Our competitors are still trying to catch up with the first iPhone, he adds.
• Snow Leopard? Cook says the company’s been “pleasantly surprised” by sales of Apple’s latest OS.
• How does Apple benefit from carrier-exclusivity iPhone deals? Cook says carriers with exclusivity deals are willing to invest more in the platform and that means greater innovation. Visual voicemail is an example of that. That said, he adds, “We’ve found no lack of people wanting to sell iPhones, frankly.”
• International store revenue up more than 20 percent, on average.
• More on iPhone supply issues. Cook insists this is not a component issue, though he notes that silicon can sometimes be hard to get. “We feel good about our position now.”
• And still more on iPhone supply issues: How many iPhones would Apple have sold if it had an adequate supply? Impossible to say, really, Cook says, adding that 3GS units were in short supply virtually everywhere in September.
• Enterprise demand for the iPhone is very strong. It’s either being deployed or already in use at some 50 percent of Fortune 100 companies. Same with Europe and the FT 100. Widely used in higher ed and government as well.
• But perhaps not widely enough. Asked about institutional sales, Cook says Apple isn’t seeing much stimulus funding. The company’s worried about state spending. Says Cook, “We may see more this quarter, but it’s too early to tell.”

Essentially, Wi-Fi Direct turns supporting devices into access points, allowing them to connect to one another without joining a traditional network. They’ll support typical Wi-Fi ranges and the same data-transfer rates, which in the case of 802.11n is some 30 times faster than the three megabits per second for Bluetooth.

“Wi-Fi Direct represents a leap forward for our industry. Wi-Fi users worldwide will benefit from a single-technology solution to transfer content and share applications quickly and easily among devices, even when a Wi-Fi access point isn’t available,” Wi-Fi Alliance Executive Director Edgar Figueroa said in a statement. “The impact is that Wi-Fi will become even more pervasive and useful for consumers and across the enterprise.”

And Bluetooth inevitably less so. Especially since Wi-Fi Direct will be available as a software upgrade for existing Wi-Fi devices. Why wait around for high-speed Bluetooth, which itself will rely on Wi-Fi for high speed data transfers, when you can use Wi-Fi Direct for your personal area network?

In the consumer market, Apple (AAPL) scored 811 points out of a possible 1000, exceeding the industry average of 765. Its closest rival, LG–the only other company to beat that average, scored 776.

Apple’s performance in the enterprise market was equally impressive. The company scored 803 points out of a possible 1000. That was 79 points more than RIM, whose BlackBerry took second place with a score of 724 points, the industry average.

And what of Palm (PALM) devices and smart phones running Microsoft’s (MSFT) Windows Mobile OS? Neither had a particularly remarkable showing. Among consumer smart phone users, Palm devices scored 731, while WinMo devices from Samsung and HTC both scored 739. And among business users, Palm devices scored 688, while WinMo devices from Samsung and HTC scored 697 and 692, respectively. The study, it should be noted, was fielded between January and June 2009, so it does not account for Palm’s new Pre handset. (See charts below; click to enlarge.)

Clearly, the iPhone has gained a fair bit of traction in enterprise in a relatively short time. Who was it again who said the iPhone “doesn’t appeal to business because it doesn’t have a keyboard”?

[Image credits: MacDailyNews, J.D. Power and Associates ]

“Notwithstanding the slow recovery of demand from the enterprise sector, we are encouraged that industry momentum has turned positive following the steepest downturn in more than a decade,” said SIA President George Scalise.

Great news were it not for the fact that at $19.1 billion, August sales were down a horrific 16.1 percent year-over-year. Furthermore, for the first eight months of 2009, sales are at $133.8 billion–about 21.3 percent below this time last year.

So while it’s wonderful that we’re seeing these sequential improvements, it’s important to remember that the industry is still fairly deep in the abyss and has a long way to go before it climbs out.

Priced at about $36 per user per year, iNotes is cheaper than Google’s (GOOG) Apps Premier Edition offering, which costs about $50 per user per year. And while it might not offer as many bells and whistles (IBM’s 1GB of storage is significantly less than the 25GB that Google provides), IBM (IBM) claims it more than makes up for it in security, reliability and privacy.

“We run the world’s most mission critical systems for banks, telcos and utilities,” said Sean Poulley, IBM’s vice president of online collaboration services. “It’s fair to say we’re pretty trusted….Candidly, Google has shown itself to be weak….There is a world of difference between supporting a consumer-grade service and a business-grade service. We’re bringing business class services and support with mission critical reliability at a price lower than the competition.”

At Hewlett-Packard.

Quite a coup for HP (HPQ), which clearly hopes Seidl brings a bunch of Sun (JAVA) resellers and customers along with him. And quite a blow for Sun, which is seeing customer loyalty tested to the extreme thanks to the company’s planned takeover by Oracle (ORCL).

“Customers and partners alike, especially those grappling with the uncertainty of Sun’s future, need a technology partner that can eliminate barriers to business growth quickly,” Dave Donatelli, executive vice president of enterprise servers and networking at HP, said in a gloating statement. “We anticipate that Randy’s knowledge of the real business issues faced by today’s CIOs, coupled with his high level of energy, passion for technology and a strong network of channel relationships, will expand HP’s success.”

“If, just for one dollar, if we could buy IBM, HP, Sun or some other tech company, I’m not sure we wouldn’t pick Sun.”

– Oracle CEO Larry Ellison

The European Commission’s inquiry into Oracle’s proposed acquisition of Sun is costing the database giant dearly. Speaking at a Churchill Club event in Silicon Valley Monday evening, Oracle CEO Larry Ellison said Sun is losing $100 million a month because of the extended European antitrust review.

The uncertainty around the deal has sent some shaken Sun (JAVA) customers running to rivals like IBM (IBM) and Hewlett-Packard (HPQ). “The longer this takes, the more money Sun is going to lose, and that’s not good for anybody,” Ellison said. “We want to get this done to save as many jobs as we can.”

That said, Ellison is confident the deal will be approved. “The U.S. took their time and deliberations and cleared it. They said it was overwhelmingly a pro-competitive deal,” he said. “The Europeans have to do their job too, but I think they’ll come to the same conclusion.”

And once they do, once Oracle (ORCL) begins peddling high-performance computer systems that integrate its technology with Sun’s at the engineering level, the company will be well on its way to becoming the next IBM.

In Ellison’s view, anyway.

“I would like us to be the successor to IBM,” Ellison said. “But we want to be T. J. Watson’s IBM. Not Gerstner’s IBM. Not Palmisano’s IBM,” he said, referring to the company’s other CEOs. “That’s when IBM really was the dominant software company.”

Continuing, Ellison noted that “T.J. Watson’s IBM was the greatest company in the history of enterprise in America because its combination of hardware and software was running most of the enterprises on the planet. We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM. That’s our goal. We have a deep interest in the systems business. We think that by combining our software with hardware that we can deliver systems that can be the backbone of most enterprises in America and around the world.”

Clearly, there’s quite a bit of enthusiasm around the device and its Motoblur feature, which connects a variety of social networking services to the phone’s core functions.

Said Mark Sue, an analyst at RBC Capital: “Our initial take is favorable, and it seems that Motorola is carving out a niche in the crowded smartphone market by focusing on socially minded demographics as opposed to enterprise users or pro-sumers. We think it’s a step in the right direction.”

C.L. King analyst Lawrence Harris was similarly impressed. “Our initial impression of the CLIQ is that it is not an iPhone killer, but that it will be a contender,” he said in a research note issued today. “…Initial reviews suggest that the CLIQ’s build quality is excellent with a solid keyboard, two important selling points.”

And Tavis McCourt at Morgan Keegan said the CLIQ is a credible device–assuming Motorola (MOT) can sell enough of them. “MOTOBLUR clearly differentiates a Motorola Android-based smartphone from others on the market and provides Motorola a fighting chance at successfully turning around Mobile Devices with Android-based devices,” he noted today.

“The CLIQ appears to be a solid touch screen smartphone,” McCourt added, “but we will defer from offering a more confident opinion until we get a chance to test one and note that we expect the upcoming Motorola Android-based device for Verizon Wireless may be somewhat more impressive. We believe Motorola ultimately needs to sell about 2 million smartphones/quarter in order to become sustainably profitable in its Mobile Devices business.”

McCourt’s conclusion: “Given Motorola’s global distribution, this does not require a ‘home run’ product, but only a series of ‘solid’ products. The CLIQ appears to be a good first step in this turnaround.”

“The fifth-consecutive month of sequential increases in semiconductor sales reflects improving demand in the consumer sector,” SIA President George Scalise said in a statement. “Sales of consumer products such as netbook PCs and cell phones are supporting the modest recovery in demand that is now under way. Purchases of Information Technology products by the enterprise sector continue to be tempered by caution and longer replacement cycles. There is also evidence of a return to seasonal industry patterns.”

Great news, coming as it does after the chip industry’s seemingly endless procession of bad. Certainly, it’s reassuring that the SIA sees “evidence” of a return to normal sales patterns, even if they are at a lower level. The semiconductor sector is typically among the first industries to recover ahead of a broader market turnaround. This latest report suggests we may be at the beginning of just that or at least at an inflection point where the uncertainty in consumer and enterprise technology markets that’s been such a drag on the industry begins to abate.

Dell (DELL) earned $472 million, or 24 cents a share, on revenue of $12.76 billion. Analysts surveyed by FactSet Research had expected it to earn 22 cents a share on $12.6 billion in revenue. Dell shares spiked nearly seven percent when the news was released, oddly, at 3:57–three minutes before the close of trading Thursday (click on the image below).

Lousy afternoon for someone in Dell Investor Relations. Anyway….

In a statement, CEO Michael Dell said demand for the company’s products appears to have stabilized and, believe it or not, things are starting to look up.

“If current demand trends continue, we expect revenue for the second half of the year to be stronger than the first half,” Dell said in a statement. “We are expanding our capabilities in enterprise technology and services and investing in our core business to distinguish Dell both with customers and in operating performance.”

“We believe Apple is likely gaining some iPhone traction in enterprise with 19 of top 100 Fortune 1000 companies having iPhones deployed,” Um wrote. “However, we do not think this is a displacement of solutions such as BlackBerry but, rather, believe it is likely at the expense of other Microsoft Exchange capable smartphones.”

Um sees great opportunity in this trend, as long as Apple is willing to step up its game a bit. “In order for Apple to gain greater traction in the enterprise market,” he writes, “the company must overcome some issues including providing 24×7 customer support, providing more future product roadmap details (to allow large enterprises to build ahead and prepare), provide alternatives to OS upgrades solely from iTunes desktop application.”

Ironic, isn’t it, to read such a note in light of all the smack Microsoft CEO Steve Ballmer once talked about the iPhone? “There’s no chance that the iPhone is going to get any significant market share,” Ballmer said in 2007. “No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.”

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• Windows Mobile 6.5 “an Amazing Engineering Feat,” All Right…
• Perhaps if They Think of Their Win Mobile Devices as Broken iPhones…