dpace32

The wires are alight with news that Palm will be announcing a deal to sell a 25% stake to Elevation Partners. The private equity firm where Bono is a founding partner will shell-out $325 million for the privilege of helping Palm reorganize. Jon Rubinstein, Apple's retired head of hardware -- yes, that hardware -- joins Palm as executive chairman to head up product development while Apple's former CFO Fred Anderson -- yes, that Fred Anderson -- joins Palm's board of directors. Sure, it's not the sale that many had hoped for, but at least we can look forward to a new limited edition black and red Foleo which is somethin'.

ENGADGET LINK

samkim

1. Very cool news. I hope the infusion of Apple management talent means they'll stop their habit of making underpowered devices. Unfortunately, we probably won't see the effect in new products until next year.

2. I've often said that the talk about Palm dying was stupid because it's sitting on $500 million cash and investments, and it has no long term debt. Well, this deal involves borrowing $400 million in order to pay out $900 million to shareholders. Given that the market cap is only $1.7 billion, that's going to have a huge positive impact on return on equity. The downside is that the debt puts Palm subject to real risk if it's profitability suffers.

3. It's funny that they waited until after the Foleo announcement to close the deal. They probably wanted to get the market to place a value on their new product line. The market valued it at zero.


Here's a more credible NYT link:
http://www.nytimes.com/2007/06/04/te...in&oref=slogin

Insertion

I hear Fred Andersons first task will be backdating Palm options for Hawkins.

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Remember: "Anyone that thinks the Treo should just work right out of the box, shouldn't own a Treo..."
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tj8212

so is it now looking like all out war against apple and the iphone?

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backbeat

Unless one's personal financial investment is involved, why should it be?

Postal

My money is on Apple.

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Tastypeppers

Didn't someone on The Simpsons have something to say about Palm and takeovers?

'Ha ha!'

Yes. That was it.

cellneuron

I got my money back after the losses following the introduction of Foleo. Cheers.

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TreoRock

When it comes to hardware design, I've never been a big fan of Palm's hardware designs and I believe Handspring had the same issue. However, the hardware main ideas were always great. The software development has also been great. Now, if we can add some great hardware designers to the Treo family and with this new OS coming out we should have some great new products.

Al

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It all started way back in February 2000 with a Blue VDX.

Dieter Bohn

notes on the conference call up on the FP

http://treocentral.com/content/Stories/1227-1.htm

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Brandorr

This is nothing more than a succesful attempt by Wall Street to steal the company.

They basically Sucked almost a billion dollars out of Palm. THey used their share of the dispersement to pay Palm, and they basically end up with 25% of the company at no cost. This leaves Palm with a net cash position that is in the red.

This pretty much explains the campaign of deliberate misinformation that has surrounded Palm over the past 16-18 months. (Hedge Funds coluding with market makers and private equity to wrest control of this company out of the hands of retail investors, and then strip the company of cash).

That's it folks, this company is either going to be taken private, or sold off.

This doesn't help anyone, other than Wall Street crooks...

surur

Apparently Palm the company is $300 million richer after the deal. Why do you see it so negatively?

Surur

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newtonjack

http://secfilings.nasdaq.com/filingF...F4%2F2007&pdf=

Brandorr

You of all people know why it is a sucky deal for Palm.

Currently they have $504,100,000 cash in the bank, and no debt. (Yes that's half a billion dollars).

After the deal they will have $270,000,000 in cash and $450,000,000 million in debt. This leaves them with a negative cash balance of $129,000,000 in debt.

How the heck can this be spun in any way as positive for the company. This criples the company. The cash they needed for expansion is gone. The Private equity firm basically got 25% of the company for free. They will grab the rest of the company soon enough. (Either through a sale, or taking the company private)

icesalmon

Let met try to present my take. Correct me if I am wrong.
According to the news. Palm was in a vulnerable position of being taken over and approached by a big cellphone maker first, so Palm had to explore their options, try to find a higher price bidder or a better investor. After months of speculations and rumors, Palm decided to go with private-equity firm Elevation Partners. Even though Elevation is not rich enough, it can only afford to buy 25% of Palm, Palm still decided to go with that.
To prevent Palm from being taken over again, they decided to do a rather complicated financial maneuvering. By paying 900 million to stock holders, it is essentially a stock buy back funded by 500 million cash on hand and 325 million from Elevation. After the stock buy back, Palm's outstanding stock value is reduced to half, and Palm is no longer vulnerable.
This deal will bring financial stability to Palm for years, and apparently Elevation got a good deal.

samkim

Elevatation didn't get any disbursement from Palm. They're investing $325 million of their own money.

Brandorr

Let me put it another way. I am trying to get a large share of the company. I crash the company's stock price, and load up at $13. I pick 25 million of the company's outstanding shares at that price for a total of $325,000,000. I then start spreading persistent rumors of the companies acquisition. Stock recovers.

Make a play that has me receiving a $9 per share disbursement. for a total of. $225,000,000. This means I just bought 25 percent of the company for 100 million dollars. But will have the leftover cash from the dispersement: $225 million. I offer to pony up another $100 million and for a total of $425 I have purchased almost half of Palm.

I am not saying this exact scenario went down, but, it makes you wonder.

samkim

What went down is public knowledge. There's nothing to wonder about. Elevation does NOT get the cash dividend. They're buying a 25% stake for $325 million AFTER the dividend and getting no cash back.

Hdhntr23

Makes ya wonder which unit Bono and the boys will be walking around with?

The IPhone or a Treo?



They were in bed with Apple and now with Palm so it makes ya wonder?

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