Palm CEO Carl Yankowski resigns

Franklin Paul

NEW YORK: Palm Inc. on Thursday said chief executive Carl Yankowski resigned,

following a tumultuous year in which the once high-flying maker of pocket-sized

computers saw its market share chipped away by competitors and its stock price

fall 91 per cent.

In the surprise announcement, Santa Clara, California-based Palm, which

dominates the handheld market, said board chairman Eric Benhamou will act as CEO

until a successor is named.

"With Palm's transition into two individual businesses almost complete,

my role has changed, and it no longer matches my aspirations," Yankowski

said in a statement. He did not announce his future plans.

Palm shares closed down 3 cents at $2.27 on Thursday afternoon, far off the

52-week high of $65.75. In active after hours trade following the announcement,

the stock edged up to $2.35.

Yankowski was tapped to head Palm in December, 1999, when it was still a unit

of networking company 3Com Corp., for whom Benhamou served as chairman and CEO.

Yankowski had worked as president and chief operating Officer of Sony Corp.'s

Sony Electronics Inc.

Energized by bubbling demand for the personal digital assistants, or PDAs,

and firm control over both the market for the gadgets and the software that

powers them, Palm entered 2001 as one of the technology sector's hottest

properties.

But by the summer, the economic slowdown, a troubled rollout of new high-end

products and an aggressive price war with chief rival Handspring Inc. took its

toll on the company's share price and bottom line.

What's more, the company has also had to withstand the significant growth of

devices powered by Microsoft Corp.'s Pocket PC software.

And in September, Wall Street analysts were further discouraged by Palm's

decision to delay until next year a long promised wireless device. Palm said the

timing was not right, and that given the economy's sluggish condition, a delay

would not significantly affect Palm results.

Yankowski exits as Palm finalizes its plan to split its software and hardware

groups into two separate, but wholly-owned businesses.

But J P Morgan analyst Paul Coster noted that Yankowski leaves behind a

company that still has considerable troubles, including uncertainty about its

ability to turn a profit, and a cloudy strategy for selling its hardware to the

enterprise, lucrative corporate clients that buy high-end models.

"They need a wireless device, and an enterprise solution, and to make

the OS (operating system) relevant," he said. "All three of those

things are really tough to do. And the company's resources are restrained in

doing it." "They need great management, they need resources and they

need to move like lightning," he added.

Palm on Thursday also said its second fiscal quarter remains on track with

the previously announced guidance. In September, Palm forecast second-quarter

revenues "flat-to-up" from first quarter revenues of $214 million, a

47 per cent decline from the previous year.

(C) Reuters Limited.