Palm Inc.
(NDAQ:PALM) shares spiked $1.41, or 8.73%, to $17.50 in early trading
today after the company announced that it would sell a 25% stake to a
private equity partner that will bring former Apple Inc. (NDAQ:AAPL)
executives onboard. Elevation Partners announced that it would purchase
the stake in Palm for $325 million - a substantial premium to Palm's
valuation - and bring in new leadership that may help Palm finally turn
itself around.
The company began the process of exploring
strategic alternatives earlier this year as many speculated that the
company could become a buyout target for device makers interested in
the company's technology. This new move, however, is welcome news for
investors who jumped the stock price in support. Among the new
executives being brought in is Jon Rubinstein - the company's
co-founder and top product designer who helped pioneer the hit iPod.
Some
investors remain skeptical, however, as to whether or not the company
can compete with such a small market cap compared to others like Nokia.
While the deal announced today does not specifically address that
issue, the company does plan on introducing a number of new products
and technologies to broaden their offerings. Meanwhile, the new talent
will ideally help the company use these new offerings to take market
share away from existing competitors.
Clearly, this private
equity involvement is good news for all involved. Palm's plans to
extend their product line and take on great new management personnel
illustrate their commitment to improving shareholder value. This makes
PALM a stock
worth watching!
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