Palm Exec Resigns, Retention Program Put in Place
The first signs of big changes may have just begun over at Palm, but the company may not 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, has resigned. Abbott's resignation takes effect April 23.
In conjunction with the filing, Palm 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). Additionally, Palm issued 1.15 million restricted shares and $250,000 cash bonuses to Devine and Jeffries.
Research notes from UBS Investment Research say that both the resignation and Palm's 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 & the retention actions reflect the challenges Palm is facing internally. We believe any potential acquirer would likely want (and need) the WebOS development team," wrote UBS analyst Maynard Um.
Nevertheless, UBS is of the opinion that an acquisition can be expected in the near future.
"We note that many companies will likely take a look at Palm (no downside to examining a competitor), though we believe interest is likely to be tepid at current levels. With customer discussions likely now focused more on Palm's future rather than its products, we see potential rising risk of WebOS product de-emphasis," Um wrote.
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.
Shares of Palm were down slightly in early morning trading to $5.15. UBS reiterated its 'Sell' rating for Palm and a target price of $4 per share.