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Eric Benhamou: The Saga Of Palm (Part 12)

Posted on Tuesday, Oct 30th 2007

Palm’s Elevation Partners deal is a smart move to give the cmpany its best shot at a turnaround. Jonathan Rubinstein joins as Executive Chairman, as part of the deal, and the transition is due to happen soon.

SM: What about the CEO though? EB: What was critical was to be able to add this talent around the CEO that it would be compatible. We were nervous about this and it took a lot of assessing the power of a team comprising Jonathan Rubinstein and Ed Colligan. Ed is the one who is the most sanguine about this opportunity. He is the one who convinced the board that he would make it work and that he had found the right partner in Rubinstein – an individual with complementary skills. He felt the social issues and board issues were compatible.

SM: There is one gap I see in making Jonathan the operational guru, and Ed the marketing mind … what about the software side? The game is changing. The convergence device game is a software game today. Palm has so far sucked at producing decent software. EB: There is no one at the level of these people that is being brought in as part of the transaction to head up the software. Basically this transaction gives Palm the opportunity for a turnaround and enables a very visible industry star, namely Jonathan, to recruit world class talent to place in various key slots, including the slot that you have talked about.

We have talked about the software role at a Board level as well, and as Jonathan moves into his new role, one of the first things he will do is create a core team of breakthrough innovators who have a track record of working together on the software side and the hardware side.

There is a steroid injection of innovation that will take place. It is innovation with an eye towards making money, which is what Fred Anderson will help look at.

It felt like a good match. This is one of the few options available to us that could get full Board support. I realize that for companies in this situation, where the founder is still on the board, it is a very hard decision to face. The choices are to potentially sell the company, or sell a good portion of the company, or entrust the company to a new Chairman who has never worked for the company before. We had to create sufficient comfort around that, and we crossed that point in the spring timeframe this year.

SM: How long do you think it is going to take to execute on this investment thesis? EB: I would say that it is going to take a full year before you start to visibly see the signs of a turnaround. It will take a product cycle, but the good thing about this industry is that the product cycle is very quick. There are several things which are en route but can still be affected mid stream. I would say that before the end of 2008, Palm should have given tangible signs that it has a strong innovation program, and at the same time is able to deliver now as far as revenues and earnings.

[To Be Continued]

[Part 11]
[Part 10]
[Part 9]
[Part 8]
[Part 7]
[Part 6]
[Part 5]
[Part 4]
[Part 3]
[Part 2]
[Part 1]

This segment is part 12 in the series : Eric Benhamou: The Saga Of Palm
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