Palm Inc named Jon Rubinstein its CEO on Wednesday, hoping the former Apple executive will usher in a new era for a company seeking to revive its fortunes with a fresh smartphone launched last weekend.

Rubinstein, who was brought in as Palm's executive chairman when private equity firm Elevation Partners bought a stake in the company in 2007, played frontman for the new Pre phone, popping up at various industry conferences and touring retail outlets.

Rubinstein, 52, takes the helm on Friday, succeeding Ed Colligan, a 16-year Palm veteran who will take some time off and then join Elevation, Palm said in a statement.

Analysts said Rubinstein's own elevation was no surprise.

Rubinstein has been a product guy, a consumer guy who gets what the product has to be, said Avian Securities analyst Matthew Thornton.

Shares of Palm rose 3.4 percent to $12.40 in after-hours trading, after falling 5.6 percent in Nasdaq trade.

Palm pioneered the market for handheld digital devices in the 1990s, but it has fallen behind competitors like Apple Inc and Research in Motion Ltd in recent years.

Rubinstein joined Palm in October 2007 after Elevation Partners bought a 25 percent stake for $325 million.

Elevation -- based in Menlo Park, California, with investments in Forbes, online real estate information company Move and analytics firm MarketShare Partners -- claims as co-founders well-known tech investor Roger McNamee, former Apple CFO Fred Anderson and pop singer Bono.

News of Rubinstein's appointment came on the heels of Palm's launch on Saturday of its Pre, considered the company's best chance to compete against Apple and its popular iPhone.

Investors have grown accustomed to seeing Rubinstein, often casually dressed, hold forth for Palm at high-profile events.

This has been their guy, Thornton said. From an execution standpoint, he's probably the guy they want to lead the next leg of growth.

PIONEER AND LAGGARD

Palm was early to the market for smartphones, which combine a cellphone and a personal digital assistant into one device, with its Treo product. But the company's products have fallen out of favor as RIM's BlackBerry and Apple's iPhone gained share in the smartphone market.

In its fiscal third quarter ended February 28, Palm reported a $95 million net loss after the company's smartphone revenue fell 72 percent year-over-year to $77.5 million.

It is true that Palm still has challenges, said RBC Capital Markets analyst Mike Abramsky. It has to reestablish relationships and its reputation with users who have been disenfranchised by the old Palm.

But Abramsky believes Palm is poised to become a key player in the global smartphone market, armed with multiple smartphones based on its new WebOS operating system, which he said will be available through multiple wireless carriers.

Palm's first smartphone with the WebOS, the Pre, is priced at $199.99, after a $100 rebate, when purchased with a two-year service contract. A physical keyboard distinguishes it from the iPhone, which has an on-screen, software-based keyboard.

Sprint Nextel Corp, which has exclusive U.S. rights to carry the Pre, said it booked record sales of the Pre during its first weekend of sales and was restocking the phones as quickly as Palm could make them.

Shares of Palm have fallen this week amid concerns that sales of the highly anticipated new phone, which has garnered good reviews, may be hampered by supply constraints.

On Monday, Apple introduced two new models of its iPhone and cut the price of its low-end iPhone to $99, turning up the competitive heat on the Pre as the new entrant seeks to gain a foothold in the market.

RBC's Abramsky, who has an outperform rating on Palm's stock, said the market for the Pre was much broader than for the iPhone, and said Palm is much better at building smartphones than cellphone vendors such as Motorola Inc or Samsung Electronics Co Ltd.

And he said Rubinstein has recruited several important hires from companies including Apple and Microsoft Corp.

Jon is putting his stamp on the company, which is really key to the success of Palm going forward, said Abramsky.

(Reporting by Alexei Oreskovic; Editing by Edwin Chan, Gary Hill)

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