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Palm (PALM) Gets A Face-lift

Palm (PALM), the smart phone company which has been the subject of endless takeover rumors, solld 25% of itself to Elevation Parners for $325 million According to The Wall Street Journal: "Palm will pay $940 million in cash, or about…

By Douglas A. McIntyre
Published June 4, 2007, 3:56am ET · 2 min read

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Palm (PALM), the smart phone company which has been the subject of endless takeover rumors, solld 25% of itself to Elevation Parners for $325 million

According to The Wall Street Journal: "Palm will pay $940 million in cash, or about $9 a share, to existing shareholders whose ownership of the company will drop to 75% under the deal’s terms." The company will take on $400 million in debt to help cover the payout.

Elevation will bring in several executives including Apple’s (AAPL) former CFO and head of hardware development.

The deal looks like a loser. Palm gets to add $400 million in debt, gets no new strategic partner, and adds a few people who have as their claim to fame being fomer managers at Apple.

What Palm needs is a much larger strategic partner who can give the company a broad distribution and product development platform. Instead, investors get a company which may be too small to compete in the smartphone busines and a great deal of debt.

Rumors of a buy-out from a larger company had lifted the stock recently. Sprint (S), Motorola (MOT) and Nokia (NOK) have been mentioned.

Palm’s revenue per quarter runs about $400 million. With the iPhone coming to market, it needs a big brother. It hardly got that with the Elevation deal.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

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Douglas A. McIntyre

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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