After months of speculation that smart phone company Palm (NASDAQ: PALM) would be purchased by a larger company like Nokia (NYSE: NOK), the company has taken itself off the market.
Palm will sell a 25% interest to Elevation Partners for $325 million. The company will compensate existing shareholders with a $9 payment, part of which will be financed with $400 million in new debt.
Part of the new arrangement is that Elevation has gotten several former Apple executives to join the company. One is Apple's former head of hardware development.
With the introduction of the Apple (NASDAQ: AAPL) iPhone just around the corner, and mounting competition from Research-In-Motion (NASDAQ: RIMM) and the large handset manufacturers, it is very hard to see what the deal does for Palm. It did not need to pay-out $9 a share to improve its products or marketing. It needed to get a larger partner.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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