Palm distances itself from investor's boasting

Roger McNamee is about to learn that nothing can ever be withdrawn from the Internet.

Elevation Partners' Roger McNamee is excited about Palm's Pre smartphone. A little too excited.

(Credit: Corrine Schulze/CNET)

In an SEC filing for the ages, Palm attempted to do just that on Monday, distancing itself from comments made by Elevation Partners' McNamee--Palm's primary investor--regarding Palm's Pre smartphone and Apple's iPhone. Palm is expected to launch the Pre at some point before the end of the first half of the year, and while the company's financial backer is understandably excited, he seemed to lose all sense of perspective during an interview with Bloomberg last week.

In the interview, McNamee declared, "You know the beautiful thing: June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later." In other words, every single last one of those original iPhone owners is going to drop their iPhone, leave AT&T, and sign up with Palm and Sprint, even though they have no idea what the Pre is going to cost. That's usually an important consideration in a buying decision.

Salesmen are prone to hyperbole, of course. But the timing of McNamee's comments created problems for Palm, since the company was about to launch a stock offering to raise money to finance the actual launch of the Pre, currently starring in late-night television infomercials. McNamee's comments could conceivably be interpreted as a sales prediction, which could entice someone to purchase Palm's stock only to be disappointed and possibly litigious when Palm fails to put Apple's iPhone division out of business in July.

So Palm had to file a lengthy "free writing prospectus" with the Securities and Exchange Commission, clarifying or withdrawing 10 references made during McNamee's interview. For example, Palm called McNamee's iPhone reference "an exaggerated prediction of consumer behavior pattern."

Other highlights:

•  "With respect to the statements in the second to last paragraph of the article that 'the underlying technology for Research In Motion Ltd.'s BlackBerry is about 13 years old, while the technology behind the iPhone goes back almost nine years,' estimating one specific age for the many technology components underlying any mobile phone is inherently imprecise and these statements are withdrawn."

•  "With respect to the implications in the second to last and last paragraphs of the article that Palm's new operating system will give it an edge over competitors that 'are going to run out of gas way before' Palm, estimations of the relative useful lifespan of smartphone operating systems are conjecture, unverifiable at this time, and age is not necessarily predictive of their relative long-term success."

The stock offering worked out for Palm, raising $83.9 million that should keep the lights on for another few months. The Pre does indeed look like one of the first smartphones released since the iPhone capable of eroding the buzz around Apple in the mobile market, but Palm has to launch it first.

And just as Apple CEO Steve Jobs' prediction that the company would sell 10 million iPhones by the end of 2008 would have been quite embarrassing had Apple not reached that goal, McNamee's words could still come back to haunt Palm and Elevation Partners if the Pre isn't a success.

[AppleSuxLeo]

Who cares. Apple sure has exaggerated in the past. And the bottom line is Palm was up 12% today.

[iertry]

The reason it is important is because Palm is about to launch a stock offering to get some capital. If investors look at this guys comments and buy because of that his association with Palm could lead to law suits if they don't meet his expectations.

[PoisedSimplified]

Palm is only a "buy" for speculators at this point. Unfortunately, that makes it a buy for most any investor interested, because the stock won't show it's true intrinsic balance until PE begins to solidify after sale of the Pre begins and it starts to show positive ROI. If you already own it, "hold" it and ride the roller coaster until six months after the Pre's launch. Check the performance then. Depending on the capital investment and potential new webOS devices that may be in R&D at Palm (get on it, Palm!), Palm could become a good long-term investment. Palm has to profit for it to become a genuine investment, though. Value-based investors need not apply.

[CDubber]

McNamee will soon join Steve Ballmer at the dinner table for a heaping helping of crow. Served by none other than Steve Jobs.

[AppleSuxLeo]

Steve the skeleton wouldn`t have the energy to get up out of a chair to do anything , let alone serve crow.
His physical decline began with the demo of the Pre at the consumer electronics show.
Many actually think he is suffering from a Pre-induced ulcer , in addition to Pancreatic cancer.

[daedbird]

The Pre probably has the best chance of coming close to the iPhone in terms of sales and buzz, primarily because there are so many former and current Palm and Treo users out there. Plus, with each passing year, people are going to multiservice (hate smartphone moniker) phones (just ask Motorola). I doubt they will eat Apple's lunch however (not when iPhone 3G3 has cut and paste) but they may take from other 'smartphone' makers - I'm talking to you HTC and Nokia. But I see the biggest loss on Windows Mobile phones, given that Cooley held on to a dying Treo instead of switching to WIndows, and would likely jump from the iPhone (which probably has no cache in the tech world since it sounds like everyone at cnet has one).

[usarioclave1]

How come the investor isn't getting investigated for being part of a pump-n-dump scheme?

Investor says ridiculously positive things about a company product.
Company does a secondary stock offering
Company disavows comments

***?

[elllroy]

if palm is such a good investment than why did elevation partner took 25% of their money of off palm today?

[dennisl59]

This guys looks and acts like a Clinically Delusional Mental Patient. And where's the SEC?