Sony Invests $20 Million in PalmSource

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In August, Palm Inc.’s CEO David Nagel said his company was looking for strategic investors to help launch PalmSource as an independent company, which is expected to happen in the next several months. PalmSource is the subsidiary charged with developing the Palm OS. Today, Palm has announced that Sony, already a licensee of the Palm OS, will invest $20 million in the new company. Also, Sony will expand its business and technical collaboration with PalmSource.

Palm says this investment will buy Sony about 6% of the company, which means they believe all of PalmSource will be worth about $330 million. The majority of PalmSource will be owned by current Palm shareholders, as they will receive shares in the new company based on how many Palm shares they own on the record date. After the distribution of PalmSource shares, Palm shareholders will own shares in both companies.

With this investment, Sony shows it is committed to the Palm OS. However, Sony taking a minority stake in PalmSource is possibly an indication that rumors saying Sony wants to buy the whole company are false.

Sony is almost certainly not the only company who will make a significant investment in PalmSource. Mr. Nagel said in an interview with CNet that his company was in talks with several investors and suggested his company wanted to have between $60 and $80 million in cash when it launched.

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