This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Palm Defends Its Deal

Palm (PALM) may have just bought its freedom.

The smartphone company, in selling a 25% stake to private-equity firm Elevation Partners on Monday, got the one thing that its core management has fought hard for over the years: the ability to be an independent player and control its destiny.

The $325 million deal will also buy Palm the two executives it hopes can help revitalize its business -- Jon Rubinstein, former senior VP of hardware engineering and head of the iPod division at Apple (AAPL), and Fred Anderson, Apple's former CFO.

Anderson recently agreed to pay back more than $3 million and to submit to a $150,000 civil penalty to settle a stock options backdating case at Apple, while not admitting any wrongdoing.

Now, with happy shareholders, potential predatory moves thwarted and some of the sharpest minds in Silicon Valley on board, Palm believes things can only get better.

"The key reason we did this is because we believe in the future of this company," says Ed Colligan, CEO of Palm. "It is a high-risk-high-reward deal, but we felt we had the resources to make it happen."

But what Palm hasn't made clear, yet, is how the transaction will help the company hold its own in an increasingly competitive market, or create the kind of breakthrough products, such as the BlackBerry Pearl, that have put rival Research In Motion (RIMM) on top.

Palm's gambit, for now, has seemingly melted shareholders' hearts. Palm's stock soared 9.2% and closed up $1.48 to $17.57.

Under the planned recapitalization, Elevation Partners will invest $325 million in Palm, and the company's shareholders will receive $8.50 a share. Palm plans to take the new investment, existing cash and $400 million of new debt to finance the $940 million cash payout to shareholders.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs