Last week, at the D conference, I watched Jeff Hawkins, Palm’s Chairman show off Foleo, a new companion device to its Treo devices, in front of a packed audience. As I stood in the aisles, it became quickly obvious that many were not that interested in the new device, busy checking their emails on their Blackberrys. Others just simply walked out of the room. Foleo, more like fold-up-and-go!
It was a limp attempt by a company whose resident tech genius, aka Hawkins, is more enamored with his brain-start-up, to capture some of the old magic. In fact, that one demo showed that Palm was a visage of its former self, klike an aging diva, it is walking on a faded red carpet, wearing threads from another era, but not realizing that the world has moved on to prettier, shiner and sexier things.
It has lost the attention of its core demographic – the Silicon Valley tech elite – and if that wasn’t enough, Apple’s new iPhone is about 28 days from launch. Sure it has the developers, and lots of applications, but even on that front its not all peaches and champagne. Windows Mobile is coming on strong and is becoming more and more attractive to the developers.
Well, maybe selling out to anyone did seem like a good idea.
So they did – 25% of the company is being bought by Elevation Partners for $325 million. As part of the deal, Elevation gets a new series of convertible preferred stock. The stock will convert at $8.50 per share, a premium of approximately 16 percent to the implied post-distribution price over the 10 trading days ended June 1, 2007, excluding the $9 per share cash distribution.
The deal involves a massive overhaul of the board. Fred Anderson (former Apple CFO) and Elevation Partners managing director Roger McNamee will join Palm’s board of directors. Jon Rubenstein (of iPod fame) will be the Chairman of the board.
I find it ironic that only 25% of the company was sold. Does that mean there were no takers for the whole thing? This is a bit of a loser deal, as 24/7 Wall Street points out. Palm will add about $400 million in debt, in order to offer $9 a share in cash as part of this planned recapitalization. Total current assets of the company as of February 28, 2007 according to their latest 10Q filings were about $914 million.
This move while generate a lot of attention, isn’t likely to save the company, despite what the new board does. I wrote about this in my previous post: “Palm’s current state of affairs is a result of haphazard management practices and a sad tale of a company that got whip lashed by the rapid technological changes that rewarded scale more than innovation.” None of that has changed!
Glad you said this. Sad stuff, really. But what I wonder is your final quote in regards to palm. I don’t think anyone who knows the gadgets would accuse them of technological innovation. Palm does well because of scale, mass purchases by corporate IT departments.
Unfortunate typo in the second paragraph.
Its Jon not Joe Rubinstein.
damn thanks for the catch bart. appreciate it,
Om-
Pretty sure the sentence shouldn’t say:
“…kike an aging diva….”. I am sure that you meant “…Like an aging diva…”
Joshk… fixed it. sorry about that. just typing too fast and not checking the spellings. stupid idiotic mistake,
After waiting for months for this device to arrive, I must confess that I openly wept because I saw Palm looking like an old athelete looking to return to fame well after their prime.
I don’t want to remember Franco Harris in a Seahawk uniform. I don’t want to remember Hawkins with this Foleo….he was at his best with the Palm V
Palm Faileo? Palm board needs to fire their corp biz dev & marketing execs. Seriously!
Could not agree more with whatever has been said here. Palm needs change, if it’s not already too late. Foleo is not going to take off since it is a bad bad idea in the first place.
“the world has moved on to prettier, shiner and sexier things.”
Whether or not the Foleo is a failure is a question that only time can answer, but to write it off as a loser due to the fluctuating demands of tech-vanity is to give undo credibility to criteria that, in the interest of innovation, is fleeting at best.
Don’t underestimate the potential for a real overhaul when new management is brought in, especially when it’s a Silicon Valley company with some strong pockets of engineering and marketing skills, and decent channel partners in the wireless telcos. The situation at Palm is not dissimilar to the one at Apple before Jobs returned (bringing Rubenstein and Tevanian with him); if anything, Palm has more market momentum and a more solid installed base now than Apple did at the time. They just need some new product, and not just the mini-lappie.
They should have fired Ed Colligan 3 years ago. No drive or imagination on how to move Palm ahead.
Instead it was a retrenchment attitude and an incredible loss in market share under his watch.
It would be nice to take the sketching feature out of the Palm and put it into the iPhone or the Blackberry so you could transmit quick diagrams. Are there other features that could be cannibalized from the Palms?
Hawkins doesn’t have an interesting title anymore (a year and a half ago he was CTO but isn’t for some reason anymore) but he certainly isn’t PALM’s Chairman.