Palm Shareholders OK a Marriage of Desperation

Palm(PALM Quote) gave a thumbs-up to the company's plan to spin off its software arm and merge its hardware business with that of rival Handspring(HAND Quote).

The spun-off software company will be known as PalmSource, while the Palm-Handspring hardware entity will go by the name of palmOne. The two will begin trading respectively on Nasdaq under the tickers PRSC and PLMO tomorrow.

While the merger and spinoff create some momentary light and heat around the stock, the moves gave off a whiff of desperation, as big-cap competitors threaten to shoulder Palm aside.

Under the terms of the deal, Palm shareholders will receive about 0.31 shares of PalmSource for each share of Palm they own, while Handspring stockholders will receive 0.09 palmOne shares for each share of Handspring common stock. In Tuesday trading, Palm shares closed up $1.64 or 6.4% to $27.24. ...