Palm Approves Reverse Stock Split

Under the plan, which was authorized Tuesday at Palm's annual meeting, every 20 shares of common stock will be combined into one share. Trading on the reverse-split stock will start Oct. 15.

"I am convinced that this decision, combined with continued strong execution by Palm's management team, will contribute to shareholder value creation," said Eric Benhamou, Palm's chief executive.

Palm, whose stock price has plummeted from $100 per share at its March 2000 initial public offering to 65 cents on Wednesday, has suffered from product rollout glitches, weak demand and stiff competition from Microsoft Corp.

The company says the split will help it offset the decline in share price associated with the planned separation of Palm's hardware and software businesses.

Palm has already formed PalmSource as its wholly owned software subsidiary. Next year, the separation will become external, with existing Palm shareholders receiving shares in the new division.

Also, the reverse split could prevent Palm stock from being delisted from the Nasdaq Stock Market, a possibility if shares continue to trade below $1.

Palm common stock will trade under the ticker symbol "PALMD" for 20 days after the reverse split takes effect. After that, it will trade under the current symbol "PALM."

In addition to common stock, the split will affect stock options and warrants of Palm outstanding immediately prior to the split.

About 580 million shares of Palm common stock are currently outstanding.

Shares of Palm were up 5 cents to 71 cents each in midday trading.

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