Palm OS has a bright future, says outgoing CEO

Palm OS has a solid presence and a bright future, according to Dr. David Nagel, who recently resigned as CEO of the company. Nagel has had a long and distinguished career in the IT business, including serving in top technologist positions at AT&T and Apple Computer. He was referred to as "one of the great high-integrity guys in the business" by PalmOne CEO Ed Colligan during the opening keynote on May 24 at the PalmSource Mobile Summit and DevCon in San Jose.

In a separate agreement, palmOne is buying from PalmSource its rights to the Palm brand for million. After that deal, palmOne will change its name back to Palm later this year.

In the wake of the announcements, shares of PalmSource were recently up $ 1.28, or 14.4%, to $ 10.17.

PalmOne shares also seemed to get a boost from the deals, rising $ 1.39, or 5.1%, to $ 28.65.

Over the weekend, PalmSource CEO David Nagel resigned and was replaced on an interim basis by Patrick McVeigh, the company’s former head of worldwide licensing. But Nagel’s resignation was only the latest leadership change for the company. In the past year, PalmSource has replaced its CFO and its chairman and named two new board members. McVeigh himself just joined the company in February.

Citing the management turnover, Fulcrum Global Partners analyst Jamie Friedman said that PalmSource could be an acquisition target. And PalmOne could be the most likely buyer. Subtracting the cash the company has on hand, PalmSource has an enterprise value of somewhere around $ 75 million, Friedman estimated. That’s a whole lot less than the nearly $ 150 million that PalmOne has just agreed to pay PalmSource, he noted.

"You don’t have to be a math major to figure this out," said Friedman, who doesn’t have a position in PalmSource and whose firm doesn’t do investment banking. "It’s cheaper to marry than to date."