A private equity firm said it is not looking to unload its large stake in Palm ( PALM), refuting a report by an analyst this week that suggested the struggling handset maker would be in need of cash if that were to occur. Despite what should be taken as good news, Palm shares were down nearly 9% Tuesday to $2.04. However, it's not a mystery why shares of the device maker continue to trade near five-year lows. Global Capital Crown analyst Pablo Perez-Fernandez believes it's time for investors to be asking tough questions about Palm. In a report released Monday, Perez-Fernandez said that a new round of layoffs by the company, as well as a regulatory filing saying it would sell any of a number of securities, including preferred shares, hinted that Elevation Partners, the private investment firm co-founded by music icon Bono, may be giving up on Palm. "This would be consistent with the declining share price and our belief that handsets with the Nova operating system will not be available until late in 2009, clearly missing Palm's self-imposed first half 2009 deadline," Perez-Fernandez wrote in his research note. In October 2007, Elevation Partners took a 27% stake in Palm in exchange for a $325 million investment in order to allow the company to "invest in products and operational expertise so that Palm could participate fully in the growth opportunity of smartphones," according to Roger McNamee, managing director and co-founder of Elevation Partners. Late Monday, Elevation Partners moved to assuage those concerns, issuing a statement saying it had no intentions of divesting its stake in Palm. "We have a very long-term investment horizon and have no plans to exit our investment in Palm," McNamee said in the release. "Elevation supports Palm in taking the difficult but necessary steps required to migrate from legacy products."