Changing CEO's During Palm Pre Launch, Risky Notion (PALM)

What do you do as an investor when you have a hot product launch that is the entire future of a company and a new CEO gets named to replace a long-term company leader?  Palm Inc. (Nasdaq: PALM) just launched the Pre smartphone and today after the close announced that the board of directors has appointed Jon Rubinstein as Chairman and CEO upon the departure of Ed Colligan.

Colligan is stepping down after sixteen years of leading Palm.  Rubinstein joined Palm as Executive Chairman in October 2007 to help bring innovation back to the company.  He will assume the CEO role on June 12.  Colligan plans to take some time off, but will then join Elevation Partners which is deeply entrenched into Palm.

This may not be a shock to many in the field, but the timing here is not without risk.  Colligan was brought in as a leader and is supposed to be a take-charge manager that commands respect.  Shares are actually a tad higher in the after the announcement, and based upon the missteps we saw for years at Palm it is easy to say many would be cheering today’s news.  We do not take this as a key endorsement of the past, but the market is the market.  Shares are trading at $12.07 after closing down 5.5% at $11.99 today.

Jon C. Ogg
June 10, 2009