Palm plans separate unit for software group

SANTA CLARA: Palm Inc. on Friday said it plans to form a separate, wholly
owned unit for its software group, which develops the programs that power
handheld computers made by Palm and others.

Under the new structure, the Platform Solutions Group would operate
independently of its hardware group but would continue to make use of Palm's
infrastructure and staff services.

Santa Clara, California-based Palm, whose software dominates the market for
handheld computers with an 80 per cent market share, said the separation would
be completed by the end of calendar 2001. Palm Chief Executive Carl Yankowski in
June told a technology conference in New York that the company was considering a
break-up of its software and hardware companies.

Wall Street analysts have suggested that such a move would help Palm
capitalize on its leading position in the handheld software market without the
distraction of the slumping hardware market. Asked if the new structure
represented a first step toward spinning off some portion of Palm, a company
spokeswoman said, "We have no specific plans for a step beyond the
subsidiary structure at this time, but we are always interested in maximizing
shareholder value.

"This is a step to create more focus and demonstrate greater strategic
intent to build this business for our licensees and our shareholders," she
said. A committee of the board of directors of Palm, chaired by David Nagel,
AT&T Corp.'s chief technology officer, will oversee the establishment of the
new subsidiary.

Shares of Palm on Friday rose 3 cents to $5.21.

(C) Reuters Limited 2001.