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PalmSource Spins Out From Palm Inc

PalmSource, Inc., provider of Palm OS today announced its spin out from Palm, Inc. In a major milestone for the company, PalmSource, is one of the first publicly traded companies focusing on operating system software for mobile devices.

Effective October 29, 2003 11:59pm EST, PalmSource stock will begin trading on the NASDAQ stock market under the ticker symbol: PSRC. In addition to the spin-off, the stockholders approved the acquisition of Handspring by Palm, Inc. That new combined company has been renamed palmOne, Inc. The PALM and HAND ticker symbols will cease to trade. palmOne's stock will trade on the NASDAQ stock market under the ticker symbol: PLMO.

PalmSource Logo"Today's stockholder vote demonstrates strong support for the spin out of PalmSource as a separate and independent company, as well as the merger of Palm and Handspring," said David Nagel, president and chief executive officer of PalmSource. "As a stand alone public company, PalmSource can focus on maximizing stockholder value by advancing the Palm OS platform into exciting new and existing markets. Our licensees, our stockholders and all of the employees of PalmSource are delighted to become a publicly traded company, and we are committed to acting quickly to realize the tremendous opportunity this represents."

The spin out of PalmSource is expected to drive the following benefits:

  • Potential to increase the number of licensees of Palm OS;
  • Increase the competitiveness of Palm OS
  • Increase the responsiveness of Palm OS to technology change and customer needs;
  • Sharpen focus on PalmSource's businesses and strategic opportunities, and
  • Allow direct access to capital markets.

"PalmSource's competitive position extends well beyond the strength of its brand. The company benefits from a loyal base of customers, an established Palm OS platform across multiple devices and a large, diverse community of third-party developers," said Eric Benhamou, chairman of PalmSource, Inc. "Today's stockholder vote approving the spin out brings enormous promise for the mobile device and smartphone markets, which will continue growing in quality and excellence as PalmSource and palmOne sharpen focus in their respective businesses."

PalmSource's business includes Palm OS, software development tools and applications such as personal information management applications, e-mail and web browsers engineered to enable mobile information device manufacturers to create innovate products to meet diverse customer needs. In addition, PalmSource markets and sells Palm OS software titles for Palm Powered devices through its new online store at PalmSource.com.

Palm Powered Leadership
The Palm OS platform has attracted a large following, with over 30 million Palm Powered devices sold to date and software developers who have created over 19,000 Palm OS software titles, the largest collection of software for any mobile operating system.

To view the NASDAQ presentation, or PalmSource b-roll, by David Nagel, president and CEO of PalmSource, please go to PalmSource.com anytime after 9:30 a.m. EST, October 29, 2003.

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Change licencing model...

statik @ 10/28/2003 2:04:38 PM #
I wonder if this allows PalmSource to change their licencing model to allow for more manufacturers to enter the arena?

Could this be the start of seeing a Dell or HP machine running Palm OS?

RE: Change licencing model...
beebjunk @ 10/28/2003 2:25:01 PM #
I'd expect to see their model include loads of licenses in the future.

I think Toshiba originally wanted to be a Palm OS licensee. I wonder if they'd be willing to be in both camps?

Adam Yap
-------------
The Australian Palm User Group
http://www.auspug.org/

RE: Change licencing model...
frauen1 @ 10/28/2003 2:32:32 PM #
I believe they already have changed their licensing, and that the change was what caused TRG/Handera to exit the device manufacturer arena. Too bad, as they were rather innovative in their day.

Profitability

Foo Fighter @ 10/28/2003 2:23:01 PM #
It will be interesting to see if PalmSource can survive living off revenues from OS licensing in such a small market. I remain skeptical, especially since they've sold off Palm Digital Media, which could have been a very handsome revenue generator. We'll see where this goes. I wish them the best of luck.

-------------------------------
My blog: www.pocketfactory.com
RE: Profitability
frauen1 @ 10/28/2003 2:34:12 PM #
I think that they've made a lot of progress in regards to tightening their belt and cutting out the excess. I think they also get more on a per-device basis. Didn't they make money according to the last quarterly report from Palm, Inc.?

My question is more will they be acquired by some larger entity? They are a fairly small concern and very inexpensive for a large corporation who wants to become a player in the small device/smartphone field. Just my $0.02 US...

RE: Profitability
Admin @ 10/28/2003 2:35:55 PM #
Foo, what small market are you talking about? 30 million devices sold to date and the smartphone market is on the verge of exploding. The traditional unconnected PDA concept may be on the way out but smartphones and similar wireless handhelds have a big growth curve ahead.

-Ryan

RE: Profitability
Foo Fighter @ 10/28/2003 2:45:09 PM #
> Foo, what small market are you talking about? 30 million devices sold to date

That number dates back to the earliest PalmOS devices manufactured, most of which are laying in landfills. The PDA sector is little more than a bug fart compared to other key markets, particularly the cell phone industry. 30 million devices sold in 7 years is hardly a vast field. That's only a little more than the projected number of Macintosh systems in circulation (isn't it 25 million?).

> and the smartphone market is on the verge of exploding.

That remains to be seen. So far the buying public has looked at Smartphones with disinterest. This "explosion" you refer to won't take place until prices fall dramatically, which won't be for quite some time. And PalmSource doesn't have the Smartphone market to itself either. They still have to go up against Symbian (which already has a strong presence in the market), and Microsoft (although I'm skeptical MS is going to get very far with their platform. We'll see.

-------------------------------
My blog: www.pocketfactory.com

RE: Profitability
helf @ 10/28/2003 3:37:46 PM #
don't worry, if things start to get bad they will jsut get a 20mil donation from sony ;)

RE: Profitability
hoplites @ 10/28/2003 10:23:55 PM #
My prediction:

-Palm sales will remain flat or down after this christmas and only will pick up again after OS 6.0 is released.

-treo 600 will fissle out after March. (seeing what Nokia, SE, motorola, and the rest of the boys are bringing out)

There won't be any 'exploding' to be had for any Palm devices.

RE: Profitability
Miss Clie @ 10/29/2003 8:16:35 AM #
Well, well. OTOH, it would be to *PalmSource's* benefit to start cranking out faster updates to the OS and making them user-upgradable, now, wouldn't it?!

I would look forward to that.

Who Voted?

pocketscience @ 10/28/2003 4:26:32 PM #
I'm a bit miffed that I didn't get a chance to vote on this. As usual - they only send the paper-work out a few days prior to the vote - meaning non-US residents don't get the papers in time. This is not the first time it's happened, and it's not just Palm(one/Source) - other companys do this as well. As always, the world seems to end at the US border...


Cheers,

Wassup? http://www.pocketscience.com.au/

RE: Who Voted?
TooMuch @ 10/28/2003 8:07:21 PM #
Many voted two or three weeks ago. Sounds like the world mail delivery system is your culprit.

RE: Who Voted?
lamp @ 10/28/2003 8:26:20 PM #
U.S. Shareholders are notified maybe 3-4 weeks in advance. I opted to use the internet to vote:

http://www.proxyvote.com

Annual reports and proxy statements can be downloaded as .pdf files saving trees, postage, and time. Contact your broker to see how you can set this up -- not just for Palm, but for your other investments as well.


RE: Who Voted?
pocketscience @ 10/28/2003 8:57:44 PM #
Papers arrived in todays post... great...

Thanks for tha other tips.


Cheers,

Wassup? http://www.pocketscience.com.au/

RE: Who Voted?
ocspub @ 10/28/2003 11:15:32 PM #
Well, for what it's worth, I live less than 30 miles from Palm/PalmSource HQ, and only got the proxy and that fat "phone book" accompanying it last Thursday. Unfortunately I didn't have enough time over the weekend to read all 400+ pages, so I ended up not making an uninformed decision.

And yes, it's not the first time the proxy arrived a few days before the shareholders' meeting, essentially making it impossible to vote by mail (yeah, I know, I can use the internet, but it's also a matter of providing the information early enough so people can make an informed decision). Not sure, though, if the companies can be blamed for the delay; I get mine sent through my brokerage company.

RE: Who Voted?
kevdo @ 10/29/2003 10:50:59 AM #
Uh, didn't they announce the basic details on this months ago? "Uninformed decision?" Hardly. What planet have you been on?

-Kevin Crossman
RE: Who Voted?
ocspub @ 10/29/2003 10:53:09 AM #
Well, Kevin, of course they announced the "basic" details months ago in press releases, and there were plenty of stories on the web about it ("Palm spins off PalmSource, buys Handspring for stock. 'nuf said").

Still, what I got in the mailbox last week was a 400+ page book explaining the merger. Are you saying this was a waste of money to write, print, and send out to shareholders, and that a one-page press release would have been sufficient? If so, I'd think you should argue that case with the SEC, not with me (I'd agree that there's room for improvement). I think that if they do go through the trouble of doing that, they should also ensure that it doesn't just end up unread in a recycling box just because it arrived too late (again, it might have very well been the fault of my brokerage house).

RE: Who Voted?
kevdo @ 10/29/2003 11:56:32 AM #
>Are you saying this was a waste of money to write,
>print, and send out to shareholders

Not at all. What I am saying is that I'm not sympathetic about whining about not getting enough details soon enough on a proposed merger announced months ago (and which most people seemed to think was a no-brainer).

-Kevin Crossman

RE: Who Voted?
ocspub @ 10/29/2003 12:14:00 PM #
> What I am saying is that I'm not sympathetic
> about whining about not getting enough details
> soon enough on a proposed merger announced months
> ago (and which most people seemed to think was
> a no-brainer).

Well, many (not most) people also seemed to have thought that electing Bush for president was a no-brainer, and now see what you got ;-)

I really don't understand your logic. It's apparently required by law/regulation that sufficient information is provided to shareholders about certain transactions that substantially impact the structure of the corporation they own. This seems to make sense to me. Good corporate governance practices would then seem to imply that you actually make that information available to all shareholders in a timely fashion. As you said, they announced the merger intention and the spin-off intention months ago. So presumably they didn't have to send out the paperwork at the last minute?

As far as "whining" is concerned, if you got your paperwork in time and you took your time to read it and vote (assuming you are even a shareholder), good for you. I don't think, though, that it's reasonable of you to criticize others for asking what seems to be nothing more than their right as shareholders.

Yes, I could have voted on the web without reading the paperwork, and yes, I probably would have voted for the merger/spin-off. But there are typically other items on the ballot, too, like employee option plan changes or board of director elections (I don't recall if that was the case here, and I don't have the ballot handy to confirm). Do you suggest I should just rubber-stamp those items, too?

And what would you say if your absentee voter ballot and the election handbook came the day before the next presidential election?

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