updated 09:40 am EDT, Mon March 9, 2009
Palm Resell Stock
Palm this morning took action to keep itself afloat and chose to put 18.5 million shares of its stock back on the market. The move gives the early smartphone pioneer at least $49 million in cash and would simultaneously give Palm's primary investor, Elevation Partners, that same money to use in buying back stock at Palm's higher price. How many of these shares will be bought isn't specified, though buying all 18.5 million shares would equal roughly $113.8 million, or more than double their original value.
The company directly explains the share deal as an attempt to bolster launch of the Pre smartphone, which is due sometime in the next three months and which is widely deemed the company's last true chance at regaining a significant foothold in the smartphone market. Any money not used to orchestrate the launch will also go into "future product-development efforts," Palm said.
A cash infusion is considered crucial for the developer's survival. The company has no more than $220 million in cash on hand and has been concerned for months that it may need to take out loans or take other drastic steps to avoid bankruptcy. Without the Pre, the company has seen gradually declining sales as users either drop the Centro and Treo lines for competitors or else wait for the Pre.