PalmSource Sells More Shares For Capital

Posted By: Ryan Wednesday, January 14, 2004 11:29:10 AM

PalmSource announced Tuesday that it has filed with the Securities and Exchange Commission to offer additional shares of stock for the purpose of raising additional capital. The company may use the funds raised to fund investments or make future acquisitions.

The company filled a registration statement via Form S-1 with the SEC to offer an additional 2,750,000 shares of its common stock. In addition, PalmSource has granted the underwriters an option to purchase an additional 412,500 shares of common stock to cover over-allotments, if any. An underwriting group managed by Deutsche Bank Securities Inc., Needham & Company, Inc. and Thomas Weisel Partners LLC will offer the stock.

News.com reports the company plans to net around 60 million USD from the offering. The company may use the proceeds from the sale to pay off debt and fund investments or acquisitions of complementary businesses.

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Cash is good?

Strider_mt2k @ 1/14/2004 5:32:14 PM #

Maybe some research and development?
Maybe just paying some bills and keeping everything cool housekeeping-wise?

Let's hope something good comes of it!

RE: Cash is good?

Timothy Rapson @ 1/14/2004 6:34:45 PM #

This is insane. It will only water down the value of current stock by a LOT more than $60 million. It looks desperate. And what do they need ANOTHER $60 million in debt for? They have a fine set of products out now. If they can't make money selling their current lineup they ought to just close up shop and stop wandering around to stock buyers with a tin cup. It is pathetic.

I would much rather expect them to go to the companies making the PalmOnes for them in HongKong and China and make them improve their efficiencies so that PalmOne can profitably sell models that have the hardware specs of the HP 1935 for less than $200 as HP does.

RE: Cash is good?

statik @ 1/14/2004 6:47:36 PM #

Actually, according to the article, PalmSource is the one selling the stock, not PalmOne. This has nothing to with the hardware side of things.

RE: Cash is good?

ankers @ 1/15/2004 2:03:33 AM #

I had a quick glance at the filing for the last quarter:

income $15m approx
costs $20m approx (of which R&D $8m)

they have 34m in cash but they owe $20m to PalmOne, $15m to TI and have a $15m bank credit line.

So $60m is a lot of money for them.

I can't see them more than doubling spend on R&D

My guess: they are preparing to pay off some of the debt to P1 & TI plus cover costs until they can boost revenues / cut costs. Possibly some acquisitions to boost the revenue.

Are the shareholders being screwed? Doesn't look great to me but I don't see PSource as a great business model anyway.

Caveat Emptor.

Dave

a Brit in Clogland

More Dilution

Gekko @ 1/14/2004 9:42:50 PM #

Once again, the shareholders get screwed.

Not the right time!

temp_user @ 1/15/2004 7:36:56 AM #

I can't believe they are doing this? Soon the company will discredit itself, as they said they don’t need more capital!

If they want cash, why do they wait until the shares are almost at the bottom and where there is so much confusion about OS 6.0! Why can't they wait until they prove OS 6.0 works and it delivers the things they claim, before they announce shares again? Then they could get much more for the shares!
I personally don’t understand this! As an investor, I’m confused, and I hope this act can be justified somehow!

RE: Not the right time!

TooMuch @ 1/15/2004 6:11:25 PM #

OS 6 looks to be working because I just got a notice from Beiks noting that their products are "Palm OS 6" native.

expand to survive

RyanP @ 1/15/2004 8:59:06 AM #

lets face it the pda market is a niche that accounts for 15-20 million units and for which you might get $3-$6 per device in reveues from your os. that is not huge especially when you consider competition takes a nice chunk of the market.

Palm must expand its application base. Palm must go where the volumes are. Where is that? the cell phone market. They might also like to push into the embedded market for consumer devices (things like tivo, etc).

Palm must do this or they will die and it will cost them money to get into these new markets. more importantly, its going to take them time.

expand to survive

RyanP @ 1/15/2004 8:59:06 AM #

Palm must do this or they will die and it will cost them money to get into these new markets. more importantly, its going to take them time.

RE: expand to survive

McTrinsic @ 1/16/2004 3:42:30 AM #

No, not the Cellphone market.

WinCE ... err, sorry, PocketPC is beating them in the embedded industry market.

There, they are building a loyal customer base, and as a nice side effect they get an OS for PDAs.

I would estimate that during 2004 or 2005 the OS need no longer be "sponsored" by Microsoft but will be self-sufficient in income.

Where is PalmOS??

McTrinsic

Palm Source better get this right

benixau @ 1/15/2004 9:43:39 AM #

Well, they better. I don't want to have some non-independent company developing the OS that is eventually going to bring me back to sanity. If OS6 is as good as it should be (well, at least by version 6.1), maybe I can finally be rid of my iPAQ 4350.

ps. a T3 was tried first but trust me, you do want multitasking every now and then. And when you do, you are soo much happier you have it. Oh, and my P-PC has WiFi+Bt - no POS device (that isn't a sony) has that yet.

RE: Palm Source better get this right

rogerkang @ 1/15/2004 3:50:30 PM #

"And what do they need ANOTHER $60 million in debt for?"

This is an equity deal...they are not selling bonds, they are not issuing debt. They're selling shares (equity), (and in the process, diluted my shares!)
:(

RE: Palm Source better get this right

TooMuch @ 1/15/2004 6:15:19 PM #

I, too, am not thrilled with the news. It will devalue current shares immediately. OTH, if this provides growth captial that is leveraged successfully it may bring long term increased value. If it works, they're brilliant. If it doesn't stock holders will lose and call them stupid. We'll see.