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Apr. 20, 2010

Rumors are still flying high at Palm. After its stock climbed more than 22 percent last week, in the last few days it has lost almost all of that gain. So will the company be acquired soon or not? It all depends to whom you talk to.

In fact, Palm may not even be readying itself for the takeover many have been predicting...

The company said in a filing with the Securities and Exchange Commission (SEC) that Michael Abbott, senior vice president of software and services and the man who led the WebOS apps platform and services development last year, has resigned.

And to top it off, Abbott's resignation takes effect as soon as Friday!

In conjunction with the SEC filing, Palm also noted that it has implemented a retention program for a number of top-ranking executives. The list includes: Jeff Devine (SVP Global Operations), Doug Jeffries (CFO), Michael Bell (SVP of Product Development), Kathleen Mitic (SVP Product Marketing), Jeffrey Zwerner (SVP Brand Design) and David Whalen (SVP Brand Design).

And Palm also issued 1.15 million restricted shares and $250,000 cash bonuses to Devine and Jeffries to try to keep them on board.

Multiple rumors of Palm putting itself up for sale were reignited recently when The Wall Street Journal reported that the company had enlisted the help of Goldman Sachs and Qatalyst Partners to find a suitor.

Also, research notes from UBS Investment Research say that both the resignation of Abbott and Palm's new implementation of a retention program are evidence that a takeover is NOT pending.

"We believe the timing of the resignation likely indicates that an acquisition is not pending and that Palm's retention actions reflect the rather big challenges the company is currently facing internally. We believe any potential acquirer would likely want the WebOS development team," wrote UBS analyst Maynard Um.

UBS is still of the opinion that an acquisition can be expected in the near future, however.

"We note that many companies will likely take a look at Palm, though we believe that the overall interest is likely to be lower at current levels. With customer discussions likely now focused more on Palm's future rather than its products, we see a rapidly diminishing interest of WebOS products," Um wrote.

Overall, Palm's stock was down slightly in early morning trading yesterday to $5.15.

UBS reiterated its 'Sell' rating for Palm and a target price of $3.50 per share.

In the coming two to three weeks, it will be interesting to follow the developments around Palm, and if a potential suitor does come in and acquire the company.

Some wireless industry analysts now say that the fact that Abbott has resigned speaks volumes of what's going on inside the company. Meanwhile, Apple continues to shine with the iPhone and its new iPad.

And Google's Android OS is also as strong as ever. Some are now predicting that Google's new Nexus One smartphone will continue to take a bit more market share away from the iPhone and the iPad.

Last month, Verizon and Sprint released Palm's upgraded the 1.4 version of its Linux-based OS for the Palm Pre and the Pixi smartphones.

Featuring the much-anticipated video capture and editing functionality plus improved messaging features, WebOS 1.4 arrives just a few weeks after Palm announced lowered investment guidance due to disappointing smartphone sales.

Overall, Palm's new WebOS ver. 1.4 OS fills in a much-requested wish-list item by enabling video capture. The new version offers a video editing feature, as well as the ability to quickly upload videos to YouTube or Facebook, or send them via email or SMS.

The new video editor offers some basic but popular features, such as the ability to edit out the beginning or ending of a video clip. This comes in real handy according to some that have already tried it.

Palm's new WebOS version 1.4 follows the arrival of WebOS 1.3.5 in mid-December, which offered a variety of updates as well, some improvements and a few bug fixes to the Linux-based mobile OS, including improvements to App Catalog downloads.

Since then, the Palm Pre Plus and newly WiFi-enabled Palm Pixi Plus models arrived on Verizon Wireless.

Additionally, Palm also announced a WebOS plugin development kit and said that its WebOS developer program is now open to all mobile apps developers.

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Source: Palm.