Palm gets cash injection

An unnamed investor is putting $50m (£35m) into the handheld device vendor, Palm.

An unnamed investor is putting $50m (£35m) into the handheld device vendor, Palm.

Palm spokeswoman Marlene Somsak said the money would be used for general purposes, as well as for new initiatives in wireless technologies and for increasing sales to business leaders, including chief executives and chief technology officers. "Overall, it just shows confidence in Palm and Palm's future," Somsak said.

Analysts said the investment might indicate confidence in what will happen in the personal digital assistant (PDA) market next year.

Kevin Burden, an analyst at IDC, said handheld sales have been stagnant this year, largely because innovations have been evolutionary, without any must-have features prompting users to buy newer models. That could change next year, he said, when the promise of an integrated wireless device is more likely to be a reality.

"Maybe this investor is taking a look at Palm and taking a look at the overall handheld market [and trying to invest while stock prices are low]," Burden said.

Ken Dulaney, an analyst at Gartner Group, believes the unnamed investor is looking ahead to a wave of customer excitement that could be inspired by the next release of Palm's software, Version 5. If that happens, investors could see sales rise and share prices follow, he said.

"There's more upside to downside," Dulaney said. "I think it's probably just someone looking at the numbers there. You don't take control of a company with $50m, so it looks like more of an investment thing."

"This capital commitment demonstrates a high level of external confidence in Palm," said Eric Benhamou, Palm's chairman and chief executive.

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