Palm shares surged over 7% yesterday after German Deutsche Bank raised their price target. Their analysts think Palm is at a good value to be absorbed by another company and there could be a bit of a premium for current shareholders. Would it make sense for someone else to get into the phone space this way?Palm has been through a number of acquisitions since it was formed. First, US Robotics purchased them in 1995 and then 3M swallowed USR whole, including Palm. Palm then went public on their own. The stock was so hyped that Palm was valued at more than 3M during the initial public offering. Palm then went through the whole PalmOne/PalmSource fiasco where they spun off their OS division. That now rests with Access and PalmOS as many knew it simply withered on the vine.

PalmOne changed their name back to Palm and began feverishly working on an updated platform. After a few false starts, which included the acquisition of Be Inc.'s intellectual property and key talent, they finally released a product they could call their own - WebOS. That launched in June of 2009.

According to TheStreet.com, Duetsche Bank thinks Palm's stock should be valued closer to $19 or $20. That sent shares up over 7% from the $10.50 range on Monday to $11.29 yesterday. One of the reasons cited for this value, and why it would make a good acquisition for someone, is that their app catalog is larger than Nokia's and Microsoft's.

That reasoning falls short though. I don't know the current WebOS app numbers, but being ahead of Nokia doesn't mean much. I've stated before that while technically Nokia's Symbian is a smartphone platform, most of its users don't care about apps and are content to use it as a dumb phone or a feature phone, usually limiting their downloads to a few games or ring tones, if that. It is also misleading to say that they have more apps than Microsoft. Yes, technically they might have more apps in their app catalog than Microsoft does in their newly released Windows Marketplace for Mobile. There are still thousands of apps for WinMo though that are sold direct, outside of the Marketplace. The truth is, among smartphones, WebOS has the fewest apps available.

Getting WebOS on the Verizon network will help, but even then, Deutsche Bank estimates that Palm will only sell 600,000 devices this quarter on the carrier's network. That is well behind the annualized rate that Android, Windows Mobile, the iPhone and Blackberry devices sell. I think we'll know in six to eight months if Palm can survive. They need to rack up good sales on networks other than Sprint. They also need a new device. The Pre is a good looking device, but it hardly reached the iconic status of the iPhone. Palm needs something new as the Pre nears its first birthday. And no, it doesn't need to be a stripped down version called the Pixi.

For that matter, WebOS itself needs to be nearing a 2.0 release. Today, anything older than a year is ancient in the smartphone world.

I think it is too early to declare Palm's recovery successful and thus worthy of a potential acquisition.