Industry observers gave Palm another chance when it took a massive investment round from renowned investment firm Elevation Partners, hired ex-Apple employees and executives to revitalize the company and revealed a brand new mobile operating system in the form of webOS. However, after a lackluster 2009, the patience is waning, and the future doesn’t look too bright for the struggling company.

Vivek Arya, an analyst with Bank of America/Merrill Lynch downgraded Palm today from buy to underperform. He also had a few things to say to investors in his research note:

“Palm’s superior platform features have not translated into sufficient carrier support and consumer demand, and we are concerned the window of opportunity may be closing as Google’s Android ecosystem gains ground, [Research In Motion] revitalizes its portfolio, iPhone increases its presence, and as Microsoft reboots its efforts with Windows Phone 7. With only $130 million of net cash in an opex intensive space, Palm’s options may be limited in our view.” [Boy Genius Report]

While Palm is working to bring Palm Pre Plus and Pixi Plus devices to Verizon soon, Arya believes it may be too little, too late. Palm devices will always play a secondary role to BlackBerry and Android devices that Verizon has taken a fancy to. He also believes Palm won’t be able to sustain its expensive ad campaign, and not signing on with AT&T and T-Mobile fast enough will only hurt the company. The investment community is starting to give up. How about you? Are you still hoping for Palm to make a comeback?