Earlier this week, CNBC’s Jim Goldman wrote an article titled, “Palm Gets a Thumbs Down.” In the article, Goldman states that Pablo Perez-Fernandez, a Global Crown Capital wireless analyst, thinks that Palm’s major investor, Elevation Partners, could be preparing to pull out of the mobile handset company and take their money elsewhere. In his article, Goldman writes:
“Perez-Fernandez throws it out there that Elevation might divest, but he offers nothing concrete to support the claim. It’s reasonable, he tells me, given the circumstances, though he also tells me hasn’t gotten any specific information from Elevation on this front. He says Palm’s decision to launch a shelf registration on Nov. 3 because the company is so desperate for cash, will significantly dilute the shares, and the company risks a change in control because of that dilution. Under the rules of the Elevation deal, Palm is required to offer to buy back Elevation’s stake at a premium of 1 percent to 5 percent. Elevation, he thinks, would jump at the chance to get out. I sent an email to Elevation’s managing partner Roger McNamee this morning seeking some guidance, but I haven’t heard back.”
Interestingly, Elevation Partners co-founder and member of Palm’s board, Roger McNanmee stepped up to the mic yesterday to reaffirm Elevation’s commitment to Palm and to reassure investors that Palm is still on track to deliver a new mobile operating system, Palm OS II/Nova, by the end of this year (2008) and to release new devices based on that OS by the middle of next year (2009). Mr. McNanmee stated:
“Elevation Partners is very pleased with the progress Ed Colligan, Jon Rubinstein and the entire Palm team are making. The Company’s product pipeline, including a next generation operating system due out soon and a new device targeted for the first half of 2009, excite us enormously. Elevation supports Palm in taking the difficult but necessary steps required to migrate from legacy products. We have a very long-term investment horizon and have no plans to exit our investment in Palm.”
May people see Palm OS II/Nova as being Palm’s last change to become a relevant player in the mobile computing space. With devices from Apple and Research In Motion continuing to grab headlines, the public opinion is that Palm has been standing still for years and relying on new colors to keep people interested in their low cost, low profit Centro consumer oriented smartphones. Delays in releasing their next business class Windows Mobile Treo is not helping things.
Statements of reassurance from Palm’s major investor is nice and all, but the time has come for Palm to stop talking and to start showing people that they have something coming down the pipe that will be worth the long wait for Palm OS II/Nova.