Palm's Latest Setback: Executive Exit

Palm's software and services chief Mike Abbott jumps leaving the investors treading water.
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NEW YORK, (

TheStreet

) --

Palm

(PALM)

shares slid anew after the company said Friday that its software and services chief Mike Abbott will resign at the end of the week.

The sudden departure caused Palm to create a retention plan for at least two executives. Palm said in a filing that operation chief Jeff Devine and CFO Doug Jeffries will get restricted stock and $250,000 in bonuses if they stick around for two years.

The move comes as Palm explores options for its survival including an attempt to find a buyer.

Analysts and investors viewed the loss of Abbott as yet another setback for Palm, sending the shares down 6% Monday. UBS analysts issued a note Monday saying the departure of Abbott and the retention plan signal that a takeover deal is not in the works.

The latest news helped Palm earn another downgrade. Morgan Keegan analysts slapped Palm with a sell rating Monday.

Palm miraculous recovery as a smartphone upstart last year, has turned to disappointment after its Palm Pre and Pixi phones failed to sell well at

Sprint

(S) - Get Report

.

Palm's snub

by

Verizon

(VZ) - Get Report

this year has all but doomed Palm's chances of a strong turnaround.

Earlier this month, Palm hired bankers from Goldman Sachs and Frank Quatrone of Qatalyst Partners to peddle the company to buyers, according to

Bloomberg

. The lack of initial interest among buyers when Palm was still a comer did not exactly build confidence that a big buyout was in store. If anything, it's possible that Palm's final price tag could

penalize unsuspecting shareholders

.

--Written by Scott Moritz in New York.