|Tue Mar 10, 2009 - 4:06 PM EDT - By Annie Latham|
Monday morning, Palm issued a press release to announce the company was exercising its right to remarket approximately 18.5 million common shares underlying 49% of the units of Series C preferred stock and warrants acquired by Elevation Partners in January 2009.
A story by Roger Cheng of the Dow Jones Newswires quotes Palm's vice president of corporate communications, Lynn Fox, who said, "Raising additional capital is not at this point an operational necessity."
The announcement said that Palm would be using the proceeds from the sale to "strengthen Palm's working capital position and to further bolster the resources Palm is devoting to the launch of the Palm Pre and future product-development efforts."
In Cheng's story, the numbers being kicked around are that "Palm will have to spend $50 million to $75 million ahead of the launch to get enough phones ready," with marketing costs going as high as $50 million depending on how aggressive Palm wants to get, and how much support it receives from carrier partner Sprint.
The 8K SEC filing that Palm did to accompany the announcement warned of risk... lots and lots of risks.
Because the Palm Pre is our first product based on the Palm webOS and comes at a time when revenues from most of our legacy products are declining, the importance of the Palm Pre and Palm webOS to our business substantially magnifies the risks expressed throughout this "Risk Factors" section with respect to our products and our business. Some of these risks include:
Risky Business: We get it... this is indeed risky business for Palm with a lot of factors that may adversely affect results of operations and financial condition, including revenues, liquidity, reputation and ability to compete.
The 8K also included this morsel that will warm the hearts of some worry mongers:
We currently believe that we have sufficient cash, cash equivalents and short-term investments to meet our anticipated operating cash requirements and debt service or repayment obligations for at least the next 12 months.
That's comforting. And the Pre watch continues...###
Note: PALM stock rose as high at $6.60 on Monday before settling closing at $6.02, a .13-cent drop from its previous close.
More Palm news on the way...
Disclosure: I do not own stock in Palm, Sprint
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