Elevation injects $100m in struggling Palm

The California-based firm, which bought a 25% stake in Palm for $325m last year, is making another capital injection to help the struggling maker of mobile-computing devices after five straight quarterly losses. The firm, which includes U2 lead singer Bono as one of its partners, is investing from its debut fund, which closed on $1.9bn in 2006.

Struggling mobile-computing company Palm will get a $100 million equity injection from Elevation Partners as it works to regain its footing after five straight quarterly losses.

Palm, which introduced the Palm Pilot in 1996, has watched its share of the market continually slide as consumers have moved to the new models of the iPhone and Blackberry. The company commanded a 37 percent share of the market for hand-held computers in 2002, but doesn’t even rank in the top five this year, according to Bloomberg.

Elevation, based in Silicon Valley, will buy newly issued Series C preferred stock that is convertible

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intoPalmcommon stock at a price of $3.25 a share. The firm also will get warrants to buy seven million Palm shares at the same price.

Before March 31, Palm could force Elevation to sell up to $49 million of the new investment to other investors at the same or better terms, according to a statement from the company. Palm shares closed Friday at $2.49, but jumped as high as $3.33 Monday on news of the equity infusion.

Elevation bought a 25 percent stake in Palm for $325 million last year. The firm has said it believes Palm will “lead the next phase of the smartphone and mobile-computing markets”.

“We believe that Palm is in a position to transform the cell phone industry,” Roger McNamee, co-founder of Elevation Partners, said in a statement.

Elevation is investing from its debut fund, which closed on $1.9 billion in 2006. The firm’s partners include former The Blackstone Group’s senior managing director Bret Pearlman, Silver Lake founding principals Marc Bodnick and Roger McNamee and U2 lead singer Bono.