Palm Retreating From Efforts to Sell Company, Analysts Say
Palm appears to have shifted gears, retreating from efforts to sell the company and instead is seeking to retain key management, analysts said. While Palm was said to have hired Goldman Sachs to shop the company to potential buyers, “interest is likely to be tepid at current levels,” UBS Securities analyst Maynard Um said in a research note. Among those said to have looked at Palm are Dell and Research in Motion, analysts have said.
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As interest in Palm appeared to cool, Palm issued restricted stock options and $250,000 cash bonuses to Jeffrey Devine, senior vice president of global operations, and Chief Financial Officer Douglas Jefferies, according to SEC filings. The retention pay came as Michael Abbott, senior vice president for software and services resigned effective April 12, the filing said. The bonuses issued to Devine and Jefferies reflect “the challenges Palm faces internally,” Um said. Um kept a “sell” rating on Palm stock with a $4 price target on the shares. Palm shares closed 12 percent lower Monday at $4.92. Palm’s SEC filing didn’t “inspire confidence” among shareholders in the company’s ability to sell at a premium to its stock price, one analyst said. It also makes a buyout “appear less likely,” the analyst said.
The concerns about Palm’s future also came as RadioShack phased out current Pre and Pixi smartphones, to make way for new models, a Sprint spokesman said. RadioShack will carry the Palm Plus and Pixi Plus, he said. Analysts had speculated that RadioShack was dropping the Palm models. A staffer at a RadioShack in Danbury, Conn., said that store sold its last two Palm devices last week. Sprint and Verizon cut or deferred orders of Palm smartphones amid “much slower” than expected sales, Palm executives said last month (CED March 22 p8). Sprint was promoting the Palm Pre Monday on a two-year contract at $149 after $300 in “instant savings” and a $100 mail-in rebate. The Pixi was also available with a two-year agreement at $49 post $200 in instant savings and a $100 instant rebate.