Palm Secures $100M Investment, Continues to Struggle

Handheld computer maker Palm has announced a $100 million investment from its largest equity provider Elevation Partners who owns at least 25% of the company. The funds will be used to expand Palm’s new upcoming operating system and operations. Palm is expected to unveil its new mobile OS at the Consumer Electronics Show (CES) which runs near the end of Jan 2009. Palm continues to struggle with sales as competition stiffens from Blackberry and the iPhone. Palm will also unveil its own App Store,  similar to the Apple App Store for the iPhone. The truth is Palm continues to struggle; sales in the first half of its fiscal 2009 are down 21% year over year, or at USD $558 million. Shipments also declined 13% YoY to just under 600,000 Treo handsets moved.

Palm is also trying to take advantage of the holiday season by developing a fairly heavily promoted viral marketing campaign on Facebook which started on Nov 26 08 and should run into Jan 04 2009. The campaign simply has Palm advertisements on interactive Facebook Apps, including on Christmas themed “Claus” series Facebook Apps (which has various downloadable apps, games, etc) which have about 65,000 fans.

In addition, a survey conducted by ChangeWave with a sample size of 3,803, has found that Palm’s market share has fallen from 36% in June 2006 to only 9% in December 2008. The survey also found Apple’s iPhone market share has increased from 4% in July 2007 to 23% in December 2008.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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