Palm Authorizes 1 for 20 Reverse Stock Split

Palm Inc. announced that the Palm Board of Directors has approved a reverse stock split and established a ratio of 1-for 20. This move followed a vote Oct. 1 at the Palm Annual Shareholders' Meeting in which shareholders authorized the board to effect the reverse split. Palm common stock will begin trading on a reverse-split basis on Oct. 15, 2002.

As a result of the reverse stock split, every 20 shares of Palm common stock will be combined into one share of Palm common stock. The reverse stock split affects all shares of common stock, stock options and warrants of Palm outstanding as of immediately prior to the effective time of the reverse stock split. Palm will pay cash in lieu of fractional shares. The number of shares of Palm common stock currently outstanding is approximately 580 million.

Shares of Palm common stock will trade on the Nasdaq National Stock Market under the symbol "PALMD" for 20 trading days after the reverse split goes into effect. After that period, trading will resume under the current symbol "PALM."

"The decision made by Palm's Board of Directors to complete the planned reverse stock split in October 2002 is timely," said Eric Benhamou, Palm chairman and chief executive officer. "It paves the way for the planned separation of our PalmSource subsidiary. It adjusts Palm's capitalization structure to appropriate levels. And it enables us to attract new investors. Meanwhile, the handheld industry is moving to a new growth phase, Palm's market share is trending up, and we are entering the most comprehensive new product cycle in Palm's history. I am convinced that this decision, combined with continued strong execution by Palm's management team, will contribute to shareholder value creation."

Palm noted that a reverse stock split would allow for an adjustment in the market price of its stock prior to an external separation of PalmSource Inc., which is responsible for the development and licensing of Palm's operating system. Palm already has established internal separation of PalmSource by creating it as a wholly owned subsidiary in December 2001 and by reporting separate financial results since February 2002. Some time in calendar 2003, Palm intends to make the separation external, which would result in shareholders of Palm receiving shares of PalmSource for each share of Palm Inc. owned on the record date. After the distribution of PalmSource shares, Palm shareholders will own shares in both companies. The reverse split will enable Palm to offset the decline in per share price that is normally associated with the separation into two companies.

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Deja vu all over again...

I.M Anonymous @ 10/4/2002 7:47:04 PM #
The last paragraph is repeated.

The last paragraph is repeated.

RE: Deja vu all over again...
Admin @ 10/4/2002 8:29:00 PM #
got it, thx

never works

KRamsauer @ 10/4/2002 7:47:35 PM #
One sure-fire way to make money on Wall Street is shorting stocks after reverse-splits. Don't know if it'll work this time, but it is quite a precedent.

RE: never works
pocketscience @ 10/4/2002 8:42:16 PM #
Never say never...

Iomega did it successfully - others have too... but yes, the large percentage of reverse-splits fail... let's hope Palm have their ducks all lined up on this one...


RE: never works
twalk @ 10/5/2002 3:19:57 PM #
By the numbers, about 80% of the time it fails.

However most of the successes came from companies in the same sort of position that Palm is in. Namely the stock being split way to much to start (which always happens during a bubble), a market leading position, a fairly defensible position, and no debt.

My big worries are the negative cash flow and the fact that the new Palm devices seem pretty expensive. The $300 PPCs from Toshiba and coming soon from HP & Dell look to give a higher price/performance than the new Palms. That doesn't seem good to me.

Here's hoping....

Davy Fields @ 10/4/2002 11:37:22 PM #
These don't normally work out, but anything can happen. If anything, Palm may be redeeming itself with the new OS and palm's coming out.... last I heard, Palm was planning to announce 12 products by the end of the year.... that sounds a little extreme, but good luck to them.

-Davy Fields
RE: Here's hoping....
peter167 @ 10/5/2002 12:13:03 AM #
The number of products sometimes does not tell the whole story. But the quality and the price of the new Palm products do not sound so promising right now, given the rumored details we heard about in the last couple of months. My belief is that Palm OS will survive, but their hardware unit will just diminish and eventually die. But I am sure that Handspring will disappear first, by either going bankrupted or being bought by others. It is because their competitors are too big and Handspring and Palm do not understand what the market needs and the worst thing is that they thought they did.

Does the public really want a Zire with a $100 price tag, which serves as a day planner/organizer (because of its lack of RAM)? The unit may be stylish, like an i-Pod, but at least i-Pod comes out with 5GB at first. Zire's RAM does not even come close to any competition.

The Tungsten's are more promising. But the Zires, forget it!

Lie is the future.

RE: Here's hoping....
PacManFoo @ 10/5/2002 10:17:26 AM #
The Zire may come out near the $100 range but with the amount of markup Palm has built in retailers will be able to offer Sale Prices during the Christmas season and still everyone will be making money. Even in a few months when the units price drops Palm may still be making money off them. I would say in the current economy this was a smart move for Palm. Many people only need this type of unit. My wife carries my old Palm IIIxe which has 8mb but only uses it for Addresses and a datebook. This unit would be perfect for her. As much as we (PDA diehards) want to believe that everone is like us, the fact is more are probably like my wife.

RE: Here's hoping....
Palmcicle @ 10/6/2002 1:00:00 AM #
OK...this may be a little off the subject, but what is going on with Handspring? I looked like they were really kicking some but in the PDA market. Then Blamo! this Treo thing comes along and they ditch the conventional PDA form...not to mention the springboard slot. I bought, (just like a zillion other consumers) a Prism so I could do bunch of expansion with the slot. Hmmmm...It kind of pisses me off. The buddy of mine that recommended the Handspring is kind of embarassed by 'his brand' and will probably ditch handspring after this single finger salute their customer base. gut tells me Palm will be bought out by Sony, or Dell.

Eat Ice Cream every day...Im counting on you all to pay for my new PDA. Thank You!
RE: Here's hoping....
Take1 @ 10/6/2002 2:08:53 AM #
The Palm OS is secure due to four letters: S O N Y

They make the best Palm PDAs on the market and will continue to do so. Could be that Sony will buy out the Palm hardware division (for the name) and simply market their stuff under a different name (kind of like I.B.M.).

No doubt HP, Toshiba, Acer, VIA, Fujitsu, NEC, etc....
will be putting up stiff competition with their devices running PPC, but MS is really in a weak spot with their crippled OS (non x-scale optimized) and comparatively low-res screen (there's something I thought would never be associated with PPC!).


RSC @ 10/5/2002 10:49:43 PM #
ahh...the nice relaxing sound of 100 anonymous posters NOT responding to articles like this claiming that this demonstrates how palm is doomed...

RE: refreshing!
Take1 @ 10/6/2002 2:18:52 AM #
Palm is doomed.

Feel better? ;)

RE: refreshing!
myname @ 10/6/2002 3:28:13 AM #
Actually if you rememebered correctly there wasn't much people replying to the reverse split news anyway. Well much less than Sony release new Clies anyway.



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