Palm Gets Bailout Money, Banks On New OS
The money will give Palm some breathing room to determine whether its new "Nova" operating system, and its new devices based on it, will take off with consumers. The OS is slated to debut at the Consumer Electronics Show in Las Vegas beginning Jan. 6.
Once the master of its domain, the manufacturer of the got-to-have organizer of yesteryear has fallen on tough times. Elevation bought a 25 percent stake in Palm in October 2007 for $325 million, which is now roughly what the entire company is worth. At that time, the maker of the Treo cited the reason for the sale was to get the manufacturer out of debt. As part of the deal, former Apple vice president Jon Rubinstein, widely credited with developing the iPod, joined Palm as the executive chairman of the board.
Turns out that neither Rubinstein nor the initial investment was enough to right the ship, and $100 million more is being pumped in.
"The additional capital from Elevation Partners will enable us to put added momentum behind the new product introductions scheduled for 2009 and will provide us with enhanced stability in unsettled economic times," said Ed Colligan, Palm's president and CEO. Roger McNamee, co-founder of Elevation Partners, also noted that he believes Palm is in the position to transform the cell phone industry.
Elevation will purchase Series C preferred stock that is convertible into Palm common stock at a price of $3.25 per share, a 31 percent premium to the closing price of Palm common stock on Dec. 19, 2008.