Elevation Partners ''Very Pleased'' with Palm's Progress

[Ed Hardy]

In the wake of a recent round of layoffs and a drop in stock price, there have been rumors that the private equity firm that owns 25% of Palm, Inc. wants out of this investment. 

The private equity firm in question has released a statement:

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.

Struggling to Reinvent Its Products

Like many companies, Palm is being buffeted by the current economic crisis, but it's in an especially tough spot, as it is in the middle of a significant change. It's in the process of developing products based on a new Linux-based operating system to replace the aging Palm OS, and no one is sure how this is going to turn out.

The company's consumer flagship model, the Palm Centro, has been a solid performer, but it came out more than a year ago. It won't be replaced until the company can release devices based on its new OS, which is scheduled to happen by the middle of next year.

As a result, Palm is depending on its Windows Mobile-based Treo models, which are running into delays.

Related Articles:

• Palm Laying Off Employees, Focusing on Fewer Projects
• Palm Promises Next-Generation Operating System by Mid-2009
• Palm Still Losing Money as It Works to Reinvent Itself

Via Palm Infocenter

[Adama D. Brown]

They'd be idiots to say anything else, no matter how bad Palm was doing, when you consider the fact that the entire company is now worth less--much less--than EP paid for their 25% share. Their only hope in not taking a massive bath on the thing is that some other company decides to buy out Palm.

They also said when they bought in that they didn't think Palm was faltering, and that the future was very bright. Since then Palm hasn't had a single profitable quarter, and has seen its market cap drop from $900 million to $250 million.

[r0k]

You are pretty much saying what I thought when I read this, Adama. They have no choice but to say "everything is fine" so they can prop things up a little longer and hope to recoup more of their investment. If they said "Oh darn, we don't think this is working out" who could they sell it to? The stock would go to zero in one afternoon.

OTOH, I do think the stock price would be favorably impacted by some Nova leaks. The fact nothing has leaked out of that sieve we call Palm tends to make me wonder if there is nothing to leak out.

[jigwashere]

I'm so thankful nothing about Nova has leaked out. That pattern just seems to breed disappointment.

[r0k]

I'm so thankful nothing about Nova has leaked out. That pattern just seems to breed disappointment.

So you are saying that when it comes to Palm and Nova, no news is good news? I hope you're right.

[Adama D. Brown]

OTOH, I do think the stock price would be favorably impacted by some Nova leaks. The fact nothing has leaked out of that sieve we call Palm tends to make me wonder if there is nothing to leak out.

I've had the same thought, many times. Not to mention the fact that Palm has a reputation for being as leak-tight as cheesecloth. The only thing they successfully kept secret was the Foleo. And part of that was due to the fact that they announced it when it was still in the prototype stage.

As the number of people involved--such as beta testers, developers, etcetera--increases, so does the likelihood of leaks. So is Palm exercising really good information security, or do they not have enough that anything has leaked?

One way or another, though, I do think that they've got to get something in front of people's eyeballs soon. Even if it's just some pretty pictures of Nova and a couple of leaked device specs, it would be a lot more than they've got right now. The smartphone world is getting more and more crowded between Apple, RIM's new models, Windows Mobile 6.5 soon, and Android. If they don't grab for some relevance now, they might find themselves increasingly shut out. Look at the Treo Pro: they had a hard time getting carriers to offer what is inarguably their best device in years, even running Windows Mobile.

[Antoine Wright]

I don;t know that Palm should leak anything. At this point, a leak might be a bigger chance for a backfire than anything else. And considering the secrecy of the Foleo, no matter how proto it might have felt, it was kept quite hushed. While no company can afford time and good wills, these Palm has to use to its advantage and rock from there.

Their current issues with getting WM devices out there in a timely fashion might be another story. Since they are really hooking into doing mainly OEM rebrands, that issue of management execution might be the bigger issue they are still facing. If that part doesn't get right, no amount of secrecy or new product can help them.

[Matt J]

I think the best thing they can do right now is leak something... anything. There is still a large group of consumers that are (believe it or not) loyal to the Palm brand. Loyalty has its limits.

I have had my Treo 680 for 1.5 years. It works fine but I am eligible for an upgrade. I have nothing in the Palm lineup to "upgrade" to (no, I don't consider the Centro an upgrade). If something should "happen" to my Treo, I will probably move to a BB or WinMob device. I cannot in good conscience move to a Centro or another 680 if disaster were to strike.

There are millions of Palm OS Treo and Centro users in the "pipeline". I will assume that most of these love "Palm OS".... if they wait too long... these people will move on. If I absolutely KNEW that Nova was coming out in a few months.... if I saw some screenshots or tech specs, I would indeed wait it out.

Once the Palm pipeline is dry.... it's going to be hard to recover.

[Girt]

I agree, with all the above.

As far as leaks, that seems to be the current marketing system, and it's basically free advertising. I can't see why Palm would not take advantage of it. If anyone's worried about another Foleo repeat - don't be. If Nova doesn't make it, there's no fall-back option for Palm this time.

[Antoine Wright]

Leaks are not always free advertising. Leaks also constitute missed marketing opportunities, especially with a product such as *anything* from Palm which is currently in high demand.