Palm Closes Stores, Pays Settlement
Palm has decided to settle the class action law suit filed against it in 2005 that claimed the Treo 600/650 models failed and required fixing or replacement. Palm will pay $75 for every 600 and $50 for every 650 model, but only if the owners had to have their devices repaired or replaced two
or more times. News of the settlement caused Palm's stock value to fall three percent, a financial hit that probably bolstered their decision to close stores.
Over the next five weeks Palm will be closing all but one of its retail stores, including eight stores in California and 26 more within airports around the country. They will keep one store open at their headquarters in Sunnyvale, CA. The move is part of a strategy to cut costs and focus on their new smartphone platform. According to a company statement, Palm will "continue to focus [their] company around core business initiatives and is consolidating more resources behind fewer programs in order to compete most effectively."
Other recent moves to cut costs include an undisclosed number of job cuts at the 1200+ employee company in December and the discontinuation of its Foleo product in September. A private equity firm, Elevation Partners recently infused $325 million and acquired 27 percent of the company in the process. Due to these moves analyst Tavis McCourt at Morgan Keegan said that Palm could show “substantial financial improvement” after the company’s current fiscal quarter ends in February.
Palm will continue to sell its products via mobile carrier stores and other retailers. Purchases can still be made through online retailers, including Palm's website.
[via RCR News]
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