Extended Systems Cuts Staff After Failed Palm Deal

Extended Systems Inc., a mobile infrastructure developer , said on Thursday it has sold its Print Server business unit and will trim its work force by 15 percent, or about 50 positions, in a restructuring after a canceled merger with Palm.

Palm had been interested in Extended Systems as a way of tapping into corporate enterprise markets. In a conference call, Extended Systems management said the company will continue in a partnership arrangement with Palm.

Extended Systems produces software and systems to hook mobile workers into corporate networks, allowing them access company databases and files, use network resources such as printers, and synchronize their contact and agenda data. They also develop Bluetooth- and Infrared-enabling software to let mobile devices communicate with corporate systems.

CEO Steve Simpson said in a statement Thursday that the amount of time and effort spent on the failed Palm merger has affected the company's business and will influence results for the next two quarters. However, the company said it sees "increased demand" for its software and has a healthy amount of cash.

Palm had originally offered $22 worth of Palm shares for each Extended share, subject to certain restrictions. But one of the restrictions was that if Palm's stock price fell below $16.60, they will instead pay 1.325 shares for each Extended one. In March, Palm stock fell to around $8 so the deal dropped in value from $264 million to about $128 million.

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