SiliconBeat

HP gadget guru Phil McKinney is among those who believe everyone will eventually own at least two or three computing devices, choosing according to individual needs from among PCs, smartphones and everything in between. Right now, though, it’s that sweet spot in between that companies like Hewlett-Packard are racing to fill, with new products that try to strike the balance between mobility and user experience.

That’s where HP’s recent acquisition of Palm and its webOS software comes in. McKinney, the chief technology officer for HP’s personal systems group, was careful not to reveal plans for specific products during a talk at the MobileBeat 2010 conference Monday. (And he managed to get through a 30-minute presentation without once mentioning Apple or its iPad by name.) But he reiterated that HP plans to use webOS for what most people are calling tablets — HP calls them “slate” devices — as well as for phones and printers.

While giving no sign that HP would dump Microsoft as the operating system provider for most of its PC business, McKinney’s comments were probably no comfort to Microsoft’s mobile software folks. “We see Windows having its segments of the market,” McKinney said. But when it comes to mobile devices, he added, rather than relying on third-party software, HP believes that success lies with providing its own “end-to-end experience.”

McKinney also repeated his recruiting pitch for independent app developers, who are crucial to HP’s plans for building popular adoption of webOS. Echoing comments he made in a video recently posted on Palm’s website, McKinney suggested developers should consider building apps for webOS because HP has the scale and resources to sell “tens or hundreds of millions” of webOS devices, to both businesses and consumers around the world.

Call me an securities filings nerd, but one of my favorite things about any merger of public companies is when they file the “background of the merger” proxy. Today, Palm filed its latest proxy giving us the details of events that led to the merger with Hewlett-Packard. I’m still digesting the timeline, but in a nutshell, Palm realized that in February, after the poor launch with Verizon Wireless in January, the roof was caving in: Read the rest of this entry »

Now that I’ve had time to digest the news of Hewlett-Packard’s $1.2 billion acquistion of Palm, I’ve been thinking more about the man who sits at the heart of this deal:

Jon Rubinstein.

He’s hardly a household name in Silicon Valley. But in many ways, he’s got more on the line here than anyone else in the deal on a personal level. Yet for the most part, he’s been oddly silent since the deal was announced, except for a short interview with All Things D’s Kara Swisher.

But it’s worth remembering that the entire plan to reinvent palm revolved around Rubinstein. In my column over the weekend, I gave Palm credit for taking the risky path of trying to reboot itself. As I was researching that column, I was reminded of something that I had forgotten: The deal to get Elevation Partners to invest $325 million in Palm was all contingent on Rubinstein joining Palm.

No Rubinstein, no deal. That’ pretty extraordinary. I can’t think of another deal in Silicon Valley that was so dependent on the participation of a single individual. And it shows just how deeply the folks at Elevation believed in Rubinstein, who while at Apple was credited with developing the iPod before leaving in 2006.

So how did their $325 million man do? And did his stock go up or down after three years at Palm?

Read the rest of this entry »

UPDATE: I just got a call from someone close to Elevation Partners who walked me through the numbers. Bottom line: Elevation expects to receive $485 million from the HP deal for the $460 million it invested.

Why? The original $325 million that Elevation invested was guaranteed in the event of an exit. In other words, out of the $1.2 billion that HP is paying, Elevation get made whole for that $325 million. Through in the other warrants and other convertible stock, and Elevations winds up with $485 million.

Worth noting: That also means that common shareholders will be getting much less than the $5.70 per share being touted in press releases.

The common shareholders still get $5.70 per share, a figure calculated after Elevation’s payout is backed out.

See this post from the Wall Street Journal and this one from Barron’s for more details on how the preferred shares are structured.

MY ORIGINAL POST:

At first glance, it’s hard to say for sure whether Elevation Partners will take a hit or just about break even on its Palm investment. On Wednesday, Hewlett-Packard said it was buying Palm for $1.2 billion, or $5.70 per share.

Elevation is Silicon Valley’s big buy-out firm whose investors include Bono of U2 fame and noted venture capitalist Roger McNamee. For a good overview of Elevation, check out this TechCrunch post from a few weeks ago. Palm was one of its biggest bets.

Here’s my math on the deal: Read the rest of this entry »

The news (or at least the leaks and rumors) surrounding Palm seem to be only getting worse. Today, reports have emerged that Asian wireless companies HTC and Huawei declined to bid on Palm. The speculation now is that Chinese PC maker Lenovo is the front runner.

At the same time, Palm CEO Jon Rubinstein insisted the company could remain independent. In an interview with the Financial Times, Rubinstein suggested Palm might license its WebOS, the mobile operating system that runs the Palm Pre and Pixi, to other companies. But how much would you pay to license an OS from a company that seems caught in a death spiral?

No, it seems a sale of some sort is more likely. When you start blaming your partners for your troubles, as Rubinstein did in the FT piece, things aren’t likely to improve any time soon. Palm has Goldman Sachs and Frank Quattrone’s Qatalyst Partners on the case to find a buyer. And I have to believe there has to be a price at which Palm would be valuable to someone.

After all, Palm has a solid mobile operating system, although it’s struggled to attract developers to match the applications ecosystems of Apple’s iPhone and Google’s Android platform. But I’m guessing in part that developers are reluctant to jump in with two feet and create things for a company with such an uncertain future. A sale to someone with deep pockets could turn that around.

Here are my thoughts about who is left in the running, or should be:

Read the rest of this entry »

Last fall, the Financial Accounting Standards Board (FASB) approved changes to the way many high-tech companies will recognize revenue. We saw the first of what will be many earnings reports affected by this when Apple reported on Monday results of its fiscal first-quarter earnings.

Other companies likely to be affected include such heavy weights as Cisco Systems and Tivo.

Often such changes take months for companies to adopt. And in this case, companies have until 2011 to adopt them. But this one is different because it will give companies a significant bump in short-term revenue. So many are racing ahead. As such, investors need to watch carefully to see if a company adopted the new standard, and if they reconciled old numbers to take the new standard into account.

On Monday, Apple disclosed the accounting change up front for this year, and also adopted it retrospectively for the past two years and reconciled past earnings in an amended annual filing. Companies are not required to do adopt it for past years. So good for Apple. Many companies may only make the change going forward, making comparisons harder.

This change is not trivial. To see the impact on revenue, look at the revised numbers from years past. The change bumped revenue for Q1 2009 (last year) from $10.2 billion (0ld) to $11.9 billion (new). As far as I can tell, the company didn’t disclose what the current quarter revenue would have been under the old standard.

Still, that didn’t stop the company, in a press release, from crowing about the big numbers:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That’s true. But under the old standard, Apple’s annualized revenue wouldn’t be quite as high. It would probably be four or five billion less, though still over $50 billion.

So what’s going on? For the details, read on. Read the rest of this entry »

I just got a review unit of the new Palm Pre Plus, the new webOS phone on Verizon. I’m testing out the phone and Twittering my impressions of it.

Below you’ll find my latest observations below.

Back on Sept. 17, Palm released its long-awaited earnings. They were eagerly anticipated because these would be the first full quarter that included the performance of the Palm Pre. Ever since, analysts and investors have been trying to figure out whether the numbers were good news, bad news, or something else entirely.

This head scratching was reflected in the news coverage of the earnings. The Mercury News had a first-day headline that said “Pre Sales Give Palm A Boost.” But within a couple of days, the consensus seemed to turn against Palm, with analysts and others questioning just how good the numbers were, and worrying about the company’s outlook. Four days later, the Motley Fool wrote: “Palm Discovers Its Limits.”

The confusion was largely due to a change in accounting methods. More on that in a second. But once we take a closer look at the numbers, it seems clear to me that Palm seems to be setting itself up to be sold. And that would likely need to happen sometime in the next six to 12 months.

Read the rest of this entry »

Palm Pixi

After covering Apple’s music event this morning, I met with Palm and got a hands-on look at the company’s new Pixi smartphone, which Palm announced early today

I was a bit underwhelmed by the actual phone, which will be the second to run Palm’s WebOS software. But the Pixi, which Palm plans to launch before the holidays, will have at least one new features that will be very cool.

I found a lot to like about Palm’s Pre, the Pixi’s WebOS predecessor. One of the features that I liked most was something Palm calls Synergy. The feature collects and combines address book information from a variety of sources and displays them all together.

Read the rest of this entry »

(updated below)

VentureBeat’s Paul Boutin reports today on a new smartphone sales report, but methinks he missed the real news.

The new data comes from IDC. Boutin makes much of the fact that according to IDC’s report — at least as quoted by him; I’ve only seen the press release, not the full report — the BlackBerry Curve was the top-selling smartphone in the United States last quarter, outselling the iPhone 3G S.

“Despite all the buzz, attention and money thrown at iPhones and anything to do with iPhones, the new iPhone 3G S came in second,” Boutin writes.

Read the rest of this entry »