January 6, 2003 11:14 AM PST

PalmSource gets double boost

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PalmSource signed a new operating system licensee and received word Monday from the Internal Revenue Service that furthers its plans to become a standalone company.

Palm, the parent company of PalmSource, said in December it received a ruling from the IRS that a distribution of PalmSource shares to Palm investors will not be taxed by the federal government. The companies expect to complete the spinoff in first half of 2003, pending approval from the Palm board of directors and the U.S. Securities and Exchange Commission.

"The IRS ruling puts us another step closer to achieving our objective of creating two independent companies, each focused on the strategies required to strengthen its respective leadership position within the mobile computing industry," Eric Benhamou, Palm's chairman and chief executive officer, said in a release.

After the separation, PalmSource will focus on developing and marketing the Palm operating system while Palm will concentrate on hardware using the OS.

Also Monday, PalmSource announced it signed a new OS licensee, HuneTec. The Korean handheld maker plans to use the Palm OS in a line of pager and messaging devices, the companies said in a statement.

The handheld devices will be among the first spawned by a new PalmSource strategy designed to expand the operating system's potential market by allowing Palm OS devices to use older wireless networks for devices such as pagers to send messages.

The new HuneTec devices will use the WebLink Wireless network, which is based on Motorola's Reflex technology for two-way pagers.

The licensing agreement is the latest in a series of deals and contract renewals recently inked by PalmSource, which is the software arm of Palm.

PalmSource renewed its contract with cell phone maker Kyocera Wireless in mid-October. Sony, one of PalmSource's largest licensees, invested $20 million in the Palm subsidiary in early October. And Samsung Electronics in late September extended its license for the Palm OS through 2005.

PalmSource will also move into the Chinese market during the first half of this year, because of new licensing agreements with China's Legend Group and Group Sense.

HuneTec did not offer details on availability or prices of the new handhelds.

News.com's Richard Shim contributed to this report.

 

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