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PalmOne management shake-up could return company to roots

Todd Bradley, chief executive of Treo maker PalmOne Inc., announced plans to resign at the end of the quarter. The news alarmed investors, who sent the company’s stock down by more than $2 per share to a low of around $24. The stock recovered in later trading, with the share price rising to $25.78 Thursday.

PalmOne’s President Ed Colligan will take over as interim CEO after Bradley exits. Palm-One said Colligan is in the running for the permanent CEO position.

The news highlights several interesting factors for PalmOne. Bradley is a former executive with desktop computer maker Gateway Inc., and has deep experience in retail sales. Bradley helmed PalmOne through its acquisition of Treo designer Handspring Inc. as well as during the separation of the company’s hardware and operating system business.

“I’ve accomplished what I set out to do,” Bradley said. “The company is on a growth path, our product portfolio is exciting and competitive, and I have great confidence in the company’s current and future prospects. PalmOne has an excellent management team and talented employees to carry the business forward.”

Bradley leaves PalmOne as it transforms itself into a device vendor. PalmOne made its mark in the 1990s with the Palm Pilot-a handheld computer that largely created the personal digital assistant market. However, the PDA business has been declining. PalmOne’s acquisition of Treo designer Handspring indicated the company’s future: smart phones.

Sam Bhavnani, a mobile computing analyst for Current Analysis Inc., said Bradley’s departure should pave the way for Colligan to take over PalmOne’s reins. Colligan headed the development of the Treo smart phone at Handspring and was instrumental in developing that company’s relationships with carriers. As Palm-One transitions from PDAs to smart-phones, Bhavnani said it would be fitting to have a smart-phone exec replace a retail sales chief.

Investment firm Lehman Brothers said the executive changeup is somewhat worrisome since investors are always nervous about such alterations. The firm lowered its target price for the company’s stock from $36 per share to $30. However, Lehman said Colligan has more experience in the smart-phone market than Bradley.

If Colligan does indeed score the CEO position, it would mark a return to PalmOne’s origins. Colligan joined Jeff Hawkins and Donna Dubinsky as part of the original team who founded PalmOne in 1992. Colligan followed Hawkins and Dubinsky went they broke off from PalmOne to form rival Handspring. When PalmOne acquired Handspring, the trio returned to their former headquarters-and now Colligan could be the company’s CEO.

“Everything has come back into the fold,” Bhavnani said. “The old guard is back.”

Dubinsky left PalmOne shortly after the Handspring acquisition, but Hawkins is still with the company as its chief technology officer. Bhavnani said Hawkins is the company’s computer dreamer, the leading force behind Palm-One’s innovations. “He’s the visionary, clearly,” he said. Bhavnani said Hawkins’ presence at PalmOne is perhaps more crucial that Bradley’s.

Bhavnani said PalmOne should be gearing up to release new products, including smart phones, this year. In PalmOne’s quarter ended Nov. 30, it shipped 1.6 million devices although it did not break down the numbers into smart phones and PDAs. Bhavnani said PalmOne likely will bolster its smart-phone portfolio in the near future. In the meantime, industry is rife with rumors that Cingular Wireless will begin selling the Treo 650 in the next few weeks.

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