Major Palm Shareholder Urges Sale

Mark Nelson, a private investor who owns over 7% of Palm, has sent a letter to Palm's board recommending the company seriously consider a buyout. The letter comes amidst growing speculation on Wall Street that the company is up for sale and a recent rise in the Palm's stock price. More...

A copy of the letter, sent on tuesday, is available here from the SEC.

In the letter Mr. Nelson has general praise for Palm's management and recent successes but says "the company faces competitors who are larger and have significantly more leverage due to their market position, products and resources." He ultimately urges the board to "explore strategic alternatives, including a sale of the company."

Mr. Nelson goes on to talk about potential acquirers. He makes the case for RIM, HP, Dell and Apple as companies that would have the most to benefit. In regards to Apple he says "The prospect of Apple competing in the smartphone space is a daunting prospect for Palm. But all players in the smartphone space should similarly fear it." He recommends Apple as the ideal potential acquirer.

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Hmm

legodude522 @ 2/2/2006 1:34:29 PM # Q
Apple would be ideal but they would have to ditch Garnet. Apple may be the dream but doesn't seem like the best way to go. If there were more companies like Apple that would be good. But Apple itself would want something stable and works with a strong fan following.

Palm m125 December 25, 2002 to March 24 2004 > palmOne Zire 71 March 24, 2004 to March 31, 2005. Tapwave Zodiac 1 April 18, 2005 to November 2, 2005 > palmOne Zire 72 November 2, 2005 to present
RE: Hmm
MleB @ 2/2/2006 4:40:18 PM # Q
Of course, if Garnet proves to be a Linux/Unix based OS (PalmSource hasn't - as far as I can tell - said that Garnet will remain a PalmOS as we know it), then it may be that Apple would be interested in it and the PDAs that Palm themselves seem to have lost interest in.

Apple could widen their pocketable devices franchise and gain a portable companion to their desktop OS.

For Apple, not so much as return to Newton but rather, the creation of the pMac.

Reply to this comment

This isn't quite as new as the Journal thinks it is.

AdamaDBrown @ 2/2/2006 1:48:50 PM # Q
Unless I'm wrong, and this is someone else, the major shareholder involved is Sagio. They sent a letter to Palm around the time of their "investment report" saying that the leadership should consider doing whatever was neccessary to extract maximum value for the shareholders, even if that meant selling the company.

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 1:53:43 PM # Q

Exactly. It's all about bucks, kids, and the rest is just conversation. These people don't give a **** about you or about technology or about the industry. They're in and out for the buck and they don't take prisoners.



RE: This isn't quite as new as the Journal thinks it is.
AdamaDBrown @ 2/2/2006 1:55:29 PM # Q
Gack, I've gotten into the bad habit of skimming the article before commenting these days. Must slow down. Apparently, this is a different shareholder.

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 1:57:05 PM # Q

>doing whatever was neccessary to extract maximum value for the shareholders, even if that meant selling the company.

this core principle remains the same.



RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/2/2006 2:04:25 PM # Q
AdamaDBrown wrote:
Unless I'm wrong, and this is someone else, the major shareholder involved is Sagio.

No, it's another investor named Mark Nelson who owns 6.6% of Palm.

Mr. Nelson praised Palm's management in his letter, but he said the company is in a competitive market that faces "slowing innovation, commoditization and choked margins." As a result, Mr. Nelson wrote, Palm should "explore strategic alternatives, including a sale of the company." ... In his letter, Mr. Nelson acknowledges the rising share price of Palm and says the company is "in the ascendant." But he argues that Palm, which is one of the smallest players in a cutthroat cellphone market that is dominated by giants like Nokia Corp., faces such intense competition and likely commoditization that these "overwhelming market forces will render insignificant steps this [Palm] or any management can take."

http://www.mobilereed.com/forums/showthread.php?t=5860


David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 2:08:45 PM # Q

That prick Nelson is right. It's only a matter of time until Palm get's completely commoditized. But what he wants, like any good shareholder, is to put pressure on the Board of Directors to explore and execute a sweet sale to the highest bidder. He wants to strike while the iron is hot. Sell this pig off while things are still GOOD - while sales are high, while PALM is still a leader, while RIMM is under stress. Buy low and sell high. He wants the Board to find some sucker out there to pay a nice 20% premium.

If this prick owns about 7% now, and the market cap is about $2B, that means he owns about $140M worth. And if he bought the pig at $10/share and it's now $40, the bastard has already made over $110M+ and quadrupled his money already. I guess he wants another 20%+ as gravy. If it was me, I'd sell the pig at the top and take my profits. Pigs get slaughtered. But maybe that's why I'm not worth $140M+ and this prick is.



RE: This isn't quite as new as the Journal thinks it is.
e_tellurian @ 2/2/2006 2:09:40 PM # Q
i think, Palm has a place within a we-com industry of choices.

When the convertible car came along manufacturers did not stop offering a hard top. When the rocket came along the airplane was still of value.

Finally when new forms of transportation came along, the first form of adventurous travel, the ship was not discontinued either.

Son of Nel Palm has an interactive place in a global people driven industry too.

Some Norse never say never, they say hooga. Not everyone is going to want the same choice if so we would never have the cell phone. It has been some time since I visited my ancestors as my home is where my wife and children reside. However, trade is of value regardless of where ones ship takes them.

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution

RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/2/2006 2:11:58 PM # Q
AdamaDBrown wrote:
Gack, I've gotten into the bad habit of skimming the article before commenting these days. Must slow down. Apparently, this is a different shareholder.

Me too... didn't notice you'd followed up with this, sorry.

David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
hkklife @ 2/2/2006 2:12:48 PM # Q
Slowing innovation, commodization and choked margins? Hello? Am I have a flashback to 1999 here? Weren't these same criticisms leveled at Palm starting with the launch of the IIIx or so?

Otherwise, Mr. Nelson seems to be right on the money. ANYDAY now the house of cards that is Palm's continued sustenance on warmed over 3-year-old design retreads (Treo, T|E) is going to collapse. Add to that a glacial release cycle and numerous quality woes and you have the receipe for a "sell now, think later" report from the major shareholders.

In Palm's favor, they HAVE played along well with the carriers to date and they have a prety strong (for their size & the nature of the hanhdeld industry) balance sheet. Also in Palm's favor is the perpetual cloud hanging over RIM.

Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 2:20:46 PM # Q

i doubt DELL or Apple would ever do it - but what's nice about PALM from an acquisition sense is - it's a TURNKEY opportunity right into the smartphone business - TURNKEY relationships with all the major carriers right from the get go. It's not to hard to create a commodity phone, but I imagine it's hard to establish, develop, and refine these carrier relationships. So if Michael Dell or Steve Jobs decides - "We need to be in the smartphone business." Do they start from scratch or spend ~$2B+ and just buy their way in. I'm not sure.

RE: This isn't quite as new as the Journal thinks it is.
grimpeur @ 2/2/2006 2:25:51 PM # Q
I hope to hell that Dell doesn't buy Palm. It would be the end of the Palm OS device.

RE: This isn't quite as new as the Journal thinks it is.
hkklife @ 2/2/2006 2:27:13 PM # Q
Gekko;
If you HAD to predict TODAY which "someone" would be most likely or most benefitting from buying Palm who would you say? My $ goes to either HP or someone like LG or Matsu****a that wants to bolster (if not establish outright) their US smartphone presence.

Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX
RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 2:37:34 PM # Q

hkk - well i highly doubt Michael Dell would do it. he's not a big fan of murders and executions:

"We're not big fans of the idea of taking companies and smashing them together," Dell said. "When was the last time you saw a successful acquisition or merger in the computer industry? It hasn't happened in a long, long time..."

http://news.com.com/Michael+Dell+IBM+deal+a+dud/2100-1042_3-5481714.html

you have to ask yourself - "Who needs PALM?" does LG really need PALM? cant they just create their own WINMOB clone? they already have the carrier relationships.

HP? doubtful.

it will probably be some out of nowhere foreign no-name company like the ACCESS deal.



RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 2:43:57 PM # Q

the real money will be made with the we-com virtual wallet. whoever acquires those rights will be minting friggin money.



RE: This isn't quite as new as the Journal thinks it is.
e_tellurian @ 2/2/2006 2:46:35 PM # Q
Equity deal.

The we-com crew, if agreed, could share some of our we-com equity to help Palm become an e-knarr prototype. Palm is a PDA pioneer and has a good fit with virtual wallet pioneers too.

True HP's 200 LX was the first pocket PC running DOS. However, if Palm customers/investors and industry leaders and their customers want to help sail e-knarr then we may have something to talk about.

It is important that Palm is not being "taken over" simply growing with a future we-com industry that will keep sharing intellectual value with the founders too.

An industry that grows together has a good chance of staying together. Personally i have some silver to start the conversation. Anything that happens from this interaction must include the core we-com group as their thoughts have enhanced we-com equity too.

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 3:16:24 PM # Q

I can see it now - see #6. We'll all be kicking ourselves!!! We all laughed when we should have invested!!!

Forbes List

Rank Name Net Worth ($mil) Age Residence Source

1 Gates, William Henry III 51,000 49 Medina, WA Microsoft
2 Buffett, Warren Edward 40,000 75 Omaha, NE Berkshire Hathaway
3 Allen, Paul Gardner 22,500 52 Seattle, WA Microsoft, investments
4 Dell, Michael 18,000 40 Austin, TX Dell
5 Ellison, Lawrence Joseph 17,000 61 Silicon Valley, CA Oracle
6 Tellurian, E 16,000 41 North Vancouver, BC We-Com



RE: This isn't quite as new as the Journal thinks it is.
Surur @ 2/2/2006 3:20:29 PM # Q
Is e_tellurian a more advanced version of Eliza (http://en.wikipedia.org/wiki/ELIZA http://www-ai.ijs.si/eliza/eliza.html )

Surur

They said I only argued for the sake of arguing, but after an hour I convinced them they were wrong...

RE: This isn't quite as new as the Journal thinks it is.
e_tellurian @ 2/2/2006 3:47:25 PM # Q
:-(lol)

Freedom can be deprived with too much knowledge of wealth. As long as the folks that trade their capital for our thoughts get the value as agreed and that capital gets to the whole crew as agreed i can sleep well.

Program? True innovative thinking creates a program. Just as innovative thinking created choices to pay for our choices too.

All is good when placed in a context of agreed.

Peace,

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution

RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/2/2006 4:16:54 PM # Q
Is e_tellurian a more advanced version of Eliza?

I don't know, but I never have the faintest idea what he's talking about.

David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
e_tellurian @ 2/2/2006 4:22:49 PM # Q
:-(lol)

If you enter we-com virtual wallet in a search engine you will find more thoughts to help understand.

If you still do not understand just ask the we-com crew.

E-T

e-tellurian

completing the e-com circle with a people driven we-com solution

RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/2/2006 4:53:50 PM # Q
E-T, I tried that once when I had more time on my hands. I just got links to 100 other inscrutable PDA forum posts. You might tell your crew that as a culmination of their years of effort in getting the word out it's time to make the big move and start their very own GeoCities web site. ;-)

I don't mean to make fun or anything. For all I know you guys might have phasers.

Peace, Agreement, and E-knarr to you and the crew

[makes complicated hand gesture that symbolizes the completion of the we-com circle]



David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/2/2006 4:58:06 PM # Q

All is good when placed in a context of Greed.



RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/2/2006 5:10:44 PM # Q
I'm guessing you're not much into Yoga, Gekko.

David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog
RE: This isn't quite as new as the Journal thinks it is.
KultiVator @ 2/2/2006 5:40:26 PM # Q
Speculation about a buy out is one thing. It actually being realised is another thing altogether.

In the longer term it might be a good thing. But in the short-term, I'd like Palm to stay independent long enough to produce some devices on a Linux kernel and judge for myself whether is was worth the wait.


KultiVator

RE: This isn't quite as new as the Journal thinks it is.
hkklife @ 2/2/2006 6:26:14 PM # Q
Can anyone else think of a tech company in recent memory that has strung together such a run of profitable quarters & a nice looking balance sheet/acquisition target by merely reheating old tech? And, of course, parlaying a single design handed to them by a dying Handspring into an incessant industry buzz.

I mean, look at Palm's lackluster offerings over the past 5 years, numerous quality control issues, how they constantly abandoning a dwindling base of loyal users and their glacial release schedule. Yet somehow, they are STILL darlings to certain investors/suitors/media pundits.

Nelson IS correct in praising Palm's management...but there's just one thing they know how to do--and that is SPIN, SPIN, SPIN. Perhaps the codename of the final POS Treo is really "Gyro"?


Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX

RE: This isn't quite as new as the Journal thinks it is.
drw @ 2/2/2006 7:44:00 PM # Q
Palm

US Robotics

3-Com

Spinoff

Split-up

Reclaim name

SELL? WITHOUT AN OS DIVISION? Their value is damaged. They don't control their future. If a customer would prefer a lesser 240x240 winmobile treo over a 320x320 palmos treo, then palmos is effectively dead in the water.

I can't comprehend the popularity of the mini treo thumbpad, and I'm a thumbpad fan. When I press a button on my tungsten c I know which button I'm pressing whereas on a treo my thumb covers about 4 buttons.

The only logical choice would be for Access to buy Palm. The way to survival is to continuously innovate with interesting products. All this corporate shuffling only makes the lawyers rich. Developers are the ones who should be getting rich.

---
David

RE: This isn't quite as new as the Journal thinks it is.
PenguinPowered @ 2/3/2006 12:17:57 AM # Q
Google.

Gotta buy something for the electric sheep to graze on.

May You Live in Interesting Times

RE: This isn't quite as new as the Journal thinks it is.
KultiVator @ 2/3/2006 3:06:55 AM # Q
Yeah - a Google Handheld armed with a 3G radio, integrated SiRF-3 chipset and 'Pocket Google Earth' would make sense to a lot of people.

It would also deliver something unique and desireable - and with Google's unobtrusive advertising methods, it could provide a whole new cost model in the PDA/SmartPhone/Communicator space.

Think of all that Google online goodness wrapped up in a thin efficient OS, with an emulation layer providing backwards compatibility with OS5 and 68k apps.

Google's friendly minimalist ethos seems to be a a good match for POS simplicity.


SculptiVator

RE: This isn't quite as new as the Journal thinks it is.
Simony @ 2/3/2006 3:41:05 AM # Q
> murders and executions

Correction - M&A is jockingly called 'murders and assasinations' in my business - plagiarised from the book American Psycho.

Isn't interesting how this guy bought Palm stock at $10 (when all the M$ sponsored trolls were confidently forecasting the doom of Palm) and now he's sitting on a $140m unrealised gain. Just goes to show you - it's the sheep that get slaughtered.

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/3/2006 4:41:13 AM # Q

and look who's at #7 -

7 Beers, David 15,900 31 Manitou Springs, CO Pikesoft



RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/3/2006 8:36:45 AM # Q

maybe the we-com crew will attempt a hostile takeover of pikesoft in an all e-knarr transaction.



RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/3/2006 10:09:14 AM # Q
maybe the we-com crew will attempt a hostile takeover of pikesoft in an all e-knarr transaction.

Yeah, I'm guessing the shareholders would jump all over that one.

Speaking of hostile, what about a buyout by Microsoft? Gates seems to be rather preoccupied with finding the sweetspot between tablet PCs and PDAs, in addition to "lusting" over the Treo. If there turned out to be a meeting of minds between his vision and, say, Palm's "third business" plans, he and Ballmer might be interested in trying to develop an end-to-end integrated hardware/software product (perhaps with companion Internet services a la iTunes). As a side "benefit" such a buyout would probably drive a stake through PalmSource.

Not a pretty thought, but ya gotta wonder.

I agree that Google could be interested in the same kind of thing.



David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/3/2006 11:38:38 AM # Q

1. MSFT doesn't need the antitrust headaches.

2. MSFT does not need to own PALM. And PSRC/PalmOS has self-inflicted wounds which are fatal. The patient is condition critical.

maybe Pikesoft should make a play?

RE: This isn't quite as new as the Journal thinks it is.
cervezas @ 2/3/2006 11:42:44 AM # Q
1. MSFT doesn't need the antitrust headaches.

What antitrust headaches? Palm isn't currently a competitor and PalmSource wouldn't be absorbed, just starved.

2. MSFT does not need to own PALM. And PSRC/PalmOS has self-inflicted wounds which are fatal. The patient is condition critical.

Like I said, I'm not talking about anyone buying PSRC. As for MSFT not needing PALM, I generally agree, but I can see scenarios where they would consider it. Let's put it this way: anything that Google would like to do by acquiring Palm is something that Microsoft would like to do first.

Maybe Pikesoft should make a play?

Interesting thought. Do you suppose Palm's Directors would accept Diners Club? I think a deal consisting partly of United Mileage plus miles for stock might be attractive. If it goes through, expect Palm's customer service to get suddenly A LOT worse. And there will be a return of the Springboard slot on all future Palm devices! :-D



David Beers
Pikesoft Mobile Computing
Software Everywhere blog
www.pikesoft.com/blog

RE: This isn't quite as new as the Journal thinks it is.
hkklife @ 2/3/2006 11:57:24 AM # Q
Maybe Beersie, E-Tellurian, and Georg (the poor fellow forever looking for an "industrial stile Palm device") should make a play for a hostile takeover of Palm. ;-)

Here's another (realistic) possibility:

Cisco

Wouldn't a Cisco/Linksys-backed, Palm-branded Treo running on a WiMax network make sense? Or something similar partnered up with Google content? Someone needs to pull the rug out from under the damm Cellular providers and who better than the maker of the hottest smartphone, the leader in networking equipment/wi-fi and the Google boys?

He11, Cisco was rumored just this week to buying TiVo and/or Nintendo so why not make Palm part of the bundle as well!?!
Personally a Palm acquisition would make a LOT more sense for Cisco than would buying up Nintendo. I tossed out the idea of someonel like Netgear/D-link/Linksys buying part or all of Palm two years or so ago-it seemed a swell idea at the time and looks even better now the retreat of the dedicated PDA & the ascent of the smartphone.

Info:
http://www.theregister.co.uk/2006/02/01/nintendo_cisco_rumours/

Pilot 1000-->Pilot 5000-->PalmPilot Pro-->IIIe-->Vx-->m505-->T|T-->T|T2-->T|C-->T|T3-->T|T5-->TX

RE: This isn't quite as new as the Journal thinks it is.
Gekko @ 2/3/2006 7:30:30 PM # Q

>Like I said, I'm not talking about anyone buying PSRC.

beersie - must i explain everything to you? my point was that you said that it would help MSFT "drive a stake through PalmSource". You don't need to kill the walking dead.



RE: This isn't quite as new as the Journal thinks it is.
joad @ 2/5/2006 5:04:55 PM # Q
>MSFT does not need to own PALM.

They're coming close to it though. Perhaps the term is "p0wn3d" (or something like that...)

Bwahahaha!
The_Voice_of_Reason @ 2/5/2006 6:13:11 PM # Q
Stay tuned, Kiddies. This soap opera has more twists than One Life To Live.

If you remember three things, this will all make sense:

- All business decisions are made to make $$$ for the decision maker (not the company, share holder or consumer).

- TVoR has already explained the smoke and mirrors games that surrounded Palm/PalmSource.

- The Walrus was Paul.

Look into the Glass Onion.


TVoR

Hint: Some very Naughty People are manipulating certain stocks that have consistently proven to be extremely easy to manipulate for several years. These Naughty People have become even more wealty (knock on wood) because of their actions and the endgame is about to begin. It's been a fun ride, but like prison shower sex, all good things must end. With tension released for the final time and our earthly bodies cleansed, we depart from the delisted NYSE prison we voluntarily (and cleverly) entered so manny years ago. Thanks for the memories. God Bless. Allah Akbar!



------------------------
Sony CLIE UX100: 128 MB real RAM, OLED screen. All the PDA anyone really ever wanted.
------------------------

The Palm eCONomy = Communismô

The Great Palm Swindle: http://www.palminfocenter.com/comment_view.asp?ID=7864#108038

NetFrontLinux - the next major cellphone OS?: http://www.palminfocenter.com/comment_view.asp?ID=8060#111823

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